District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
New Mexico Farmer Sentenced to Prison for Tax Fraud, Fraudulently Collecting Farm SubsidiesRead the Press Release
Bill Melot, a farmer from Hobbs, N.M., was sentenced to serve 14 years in prison today to be followed by three years of supervised release for tax evasion, program fraud and other crimes, the Justice Department, Internal Revenue Service (IRS) and U.S. Department of Agriculture’s (USDA) Office of Inspector General announced today. Melot was also ordered to pay $18,469,998 in restitution to the IRS and $226,526 to the USDA.
Melot was previously convicted of tax evasion, failure to file tax returns, making false state ments to the USDA and i mpeding the IRS following a four-day jury trial in Albuquerque, N.M. According to court documents and evidence presented at trial and at sentencing, Melot has not filed a personal inco me tax return since 1986, and owes the IRS more than $25 million in federal taxes and more than $7 million in taxes to the state of Texas. In addition, Melot has i mproperly collected more than $225,000 in federal farm subsidies from the USDA by furnishing false infor mation to the agency. Specifically, Melot provided the USDA with a false Social Security nu mber (SSN) and a fictitious e mployer identi fication nu mber (EIN) to collect federal farm aid.
According to court documents and evidence presented at trial, Melot took nu merous steps to conceal his ownership of 250 acres in Lea County, N.M., including notarizing forged deeds and titling the property in the na me of no minees. The evidence also showed that Melot used false SSNs and fictitious EINs to hide his assets from the IRS. Additionally, Melot maintained a bank account with Nordfinanz Zurich, a Swiss financial institution, which he set up in Nassau, Baha mas, in 1992, and failed to report the account to the U.S. Treasury Depart ment as required by law.
Assistant Attorney General Kathryn Keneally for the Justice Department’s Tax Division and Acting U.S. Attorney Steven C. Yarbrough for the District of New Mexico co mmended the investigative efforts of IRS - Cri minal Investigation and the USDA’s Office of Inspector General, as well as Tax Division Trial Attorney Jed Silvers mith and Assistant U.S. Attorney George Kraehe, who prosecuted the case. Assistant Attorney General Keneally and Acting U.S. Attorney Yarbrough also thanked the Cri minal Investigation Division of the Texas Co mptroller of Public Accounts for assistance in prosecuting this matter.
More infor mation about the Justice Depart ment’s Tax Division and its enforce ment efforts is available at the website
Justice Department Sues to Shut Down Chicago Tax PreparerRead the Press Release
The United States filed a lawsuit today to bar Barbara L. Garrett, a Chicago tax return preparer, from preparing federal tax returns for others, the Justice Department announced. The civil injunction suit alleges that Garrett, while working at multiple Chicago-area tax preparation businesses including Instant Tax Service, Preferred Financial and Income Tax Solutions, claimed fraudulent deductions and credits on her customers’ federal tax returns.
According to the complaint, Garrett prepared tax returns that falsely claimed deductions from fake businesses. In one case, the complaint alleges that Garrett prepared two tax returns for a Chicago Transit Authority bus driver that reported over $25,000 in combined losses from a non-existent transportation company Garrett asserted her customer owned. The customer did not own a transportation business, according to the complaint, or in fact any business, during the years Garrett prepared these returns.
Garrett also allegedly prepared tax returns for clients that included a number of other false or improper deductions for unreimbursed employee expenses, charitable contributions, medical expenses, childcare expenses, property taxes and education expenses. One example cited in the complaint includes a fake claim for childcare expenses which falsely identified Garrett as the childcare provider. In another example, Garrett allegedly claimed over $13,000 in fictitious medical expenses and over $2,200 in bogus property tax deductions on the same return.
Return preparer fraud is one of the IRS's Dirty Dozen Tax Scams for 2013. The IRS has tips for choosing a tax preparer on their website. In the past decade, the department's Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website.
Related Materials:
United States v. Barbara L. Garrett
Complaint for Permanent Injunction and Other ReliefJustice Department Seeks to Shut Down Utah Tax PreparerRead the Press Release
The United States has asked a federal court in Salt Lake City to bar Rulon Sandoval, Andrea R. Acosta Hernandez and Latinos Office LLC from preparing tax returns for others, the Justice Department announced today. According to the complaint, the defendants have repeatedly prepared federal tax returns that understate their clients’ federal tax liabilities. The suit alleges that Sandoval, Acosta and persons working with them under the business name “Latinos Office” falsely claimed or inflated tax credits or fabricated deductions. The suit also alleges that the defendants submitted returns using false preparer identification numbers or otherwise improperly identified the returns’ preparers.
According to the complaint, the IRS has completed examinations of 47 returns prepared by Sandoval and his associates and that nearly all of those returns understated the filing taxpayer’s liability. The lawsuit alleges that the harm to the U.S. Treasury as a result of their conduct could be as much as $1 million.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2013 . The IRS has some tips on their website for choosing a tax preparer. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website.
Related Materials:
United States v. Rulon Sandoval, et al.
Complaint for Permanent Injunction and Other ReliefJustice Department Files Lawsuit to Stop Delaware Woman from Preparing Tax ReturnsRead the Press Release
The Department of Justice filed a civil lawsuit in the federal court in Delaware today to enjoin Carmen J. Martinez and her business, CJM Bookkeeping and Taxes LLC, from preparing federal tax returns. According to the complaint, Martinez and her business, which is located in Wilmington, Del., have prepared more than 7,800 tax returns since 2010.
The complaint, filed with the U.S. District Court for the District of Delaware, alleges that Martinez understates her customers’ federal tax liabilities by preparing returns that contain false deductions, including unqualified dependents, the Child Tax Credit, the Additional Child Tax Credit and tax rate benefits derived from improper filing status as Head of Household or Married Filing Jointly. As a result, Martinez’s customers improperly received tax refunds of $5,000 each year on average. The complaint alleges that Martinez’s activities between 2010 and 2013 have cost the U.S. Treasury as much as $25 million in lost income tax revenue.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2013 . The IRS has some tips on their website for choosing a tax preparer. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website.
Related Materials:
United States v. Carmen J. Martinez, et al.
Complaint for Preliminary and Permanent InjunctionJuicio Por Jurado Es Cancelado Pues El Ultimo De Los 39 Acusados Se Declara Culpable En Las Investigaciones De La Organizacion De Trafico De Drogas Nuestra FamiliaRead the Press Release
FRESNO, Calif. — Los últimos cinco acusados con juicio pendiente en una serie de casos importantísimos dirigidos a la organización Nuestra Familia se declararon culpables esta semana en el Tribunal Federal de Distrito de los EE.UU., anunció el procurador federal del distrito oriental de los EE.UU. Benjamín B. Wagner. Calixtro Israel Sanchez, alias Cali Killa, alias Cali, 26, de Hanford, se declaró culpable hoy de un delito de tràfico de drogas. Jose Velez, alias Cisco, 31, de Delano; Felipe Ramirez, alias Casper, 33, de Visalia; Christopher Medrano, alias Bob, 32, de Hanford y Florentino Acosta, de Mexico, todos se declararon culpables a principios de esta semana de delitos de tràfico de drogas.
Estos cinco acusados son los últimos entre 39 acusados que se han declarado culpables de delitos federales en estos casos coordinados. El juicio por jurado que estaba programado para el 11 de marzo de 2014 ha sido cancelado. Todos los acusados eran miembros o asociados de Nuestra Familia (NF). NF es una violenta ganga carcelaria hispana con base dentro del sistema de prisiones de California y cuyos miembros ejercen el control sobre los miembros de la ganga callejera Norteño que participan en el tràfico de drogas y crímenes violentos en toda la región de Central Valley.
De acuerdo con los documentos judiciales, durante el 2009 y 2010 la NF traficó metanfetamina por medio de la distribución de la droga y cobrando deudas en los condados de Kings, Tulare, Kern, Stanislaus, Merced, Madera y Fresno. La NF obtuvo grandes cargamentos de metanfetamina provenientes de México y los distribuyó entre los grupos de la NF en California y otros lugares. Algunas de las ganancias de este tràfico sirvieron de financiamiento para los miembros presos para poder mantener la estructura de poder dentro del sistema de prisiones.
“Muchas agencias federales, estatales y locales en esta región colaboraron para hacerle frente a una de las gangas màs peligrosas de California”, dijo Wagner, el procurador federal del distrito oriental de California. “Esa batalla continuarà, pero las declaraciones de culpabilidad tomadas esta semana son un paso importante para proteger a las comunidades del Central Valley de los violentos traficantes de la organización Nuestra Familia.”
“Las gangas carcelarias organizadas y otros criminales que trafican drogas son responsables por el aumento en la violencia en nuestras comunidades”, dijo Joseph M. Riehl, agente encargado especial de la Agencia de Alcohol, Tabaco, Armas de Fuego y Explosivos. “Esta investigación es un ejemplo excelente del trabajo en equipo y colaboración superior entre muchas agencias del orden público con una conclusión exitosa de investigación y enjuiciamientos.”
Veintiséis de los acusados que se declararon culpables ya han sido sentenciados a prisión. Nueve de ellos recibieron sentencias de entre 10 y 16 años en prisión, mientras que los 17 restantes han recibido sentencias de entre cuatro y 10 años en prisión. En el sistema federal se ha abolido la libertad condicional, y todos los acusados tendràn que servir por lo menos el 85 por ciento del tiempo de prisión que se les ha impuesto.
Este caso es producto de una serie extensa de investigaciones de la Agencia de Alcohol, Tabaco, Armas de Fuego y Explosivos; el FBI, la DEA; el Grupo de Trabajo de Narcóticos del condado de Kings; el Departamento de Justicia de California y el Departamento de Corrección y Rehabilitación de California. Muchas agencias del orden público locales tuvieron una función importante en las investigaciones, incluyendo los Departamentos de Policía de Hanford, Lemoore, Visalia, Los Banos, y Corcoran, la oficina del Alguacil del condado de Kings, la Patrulla de Carreteras de California y el Servicio de Alguaciles Federales de los EE.UU. Las ayudantes del procurador federal del distrito oriental de California, Kimberly A. Sanchez, Kathleen A. Servatius y Melanie L. Alsworth estàn procesando los casos.
La sentencia de Calixtro Sanchez està programada ante el Juez O’Neill quien lo sentenciarà el 21 de abril de 2014. La sentencia de Jose Velez està programada ante el Juez O’Neill quien lo sentenciarà el 28 de abril de 2014. Las sentencias de Felipe Ramirez, Christopher Medrano y Florentino Acosta estàn programadas ante el Juez O’Neill quien los sentenciarà el 21 de abril de 2014. Los acusados se enfrentan a una pena mandada por estatuto de un màximo de prisión de por vida y un mínimo obligatorio de 10 años en prisión y una multa de $4 millones. Sin embargo, las sentencias realmente impuestas se determinaràn a discreción del tribunal después de considerar los factores de sentencia mandados por estatuto que apliquen y las Guías Federales de Sentencia, que toman en cuenta ciertas variables.
Former Chiropractor Convicted of Tax FraudRead the Press Release
Last night, following a trial that began on Jan. 29, 2014, a federal jury convicted David Moleski, formerly of Neptune, N.J., of 14 counts of mail fraud, one count of wire fraud, one count of corruptly endeavoring to obstruct and impede Internal Revenue laws and three counts of submitting false claims for tax refunds, the Justice Department and Internal Revenue Service (IRS) announced.
According to the evidence introduced at trial, Moleski, a former chiropractor, submitted three false tax returns in 2009 for the tax years 2006 through 2008 that collectively requested over $1.3 million in income tax refunds to which he was not entitled. Prior to filing these returns, Moleski failed to file tax returns from 1999 through 2005, even though he was legally required to file. When the IRS assessed taxes for those years and began collecting, Moleski obstructed the collection efforts and demanded that a third-party financial institution not comply with the IRS levy. In addition, Moleski attempted to pay credit card bills and other debts with fake financial instruments that claimed to draw on an account at the U.S. Treasury that did not actually exist. For instance, Moleski sent a fake financial instrument for $500,000 in alleged payment of a mortgage debt.
U.S. District Judge Freda L. Wolfson of the District of New Jersey scheduled sentencing for May 21, 2014. David Moleski faces more than 30 years in prison and fines of $250,000 per count of conviction.
Assistant Attorney General Kathryn Keneally of the department’s Tax Division commended the special agents of IRS - Criminal Investigation who investigated the case, as well as Trial Attorneys Tino M. Lisella and Yael Epstein for the Tax Division who prosecuted the case. Assistant Attorney General Keneally also thanked U.S. Attorney Paul J. Fishman for the District of New Jersey and his entire office for their assistance.
Justice Department Announces Three Tribes to ImplementSpecial Domestic Violence Criminal Jurisdiction Under VAWA 2013Read the Press Release
Three American Indian tribes – the Pascua Yaqui Tribe of Arizona, the Tulalip Tribes of Washington, and the Umatilla Tribes of Oregon – will be the first in the nation to exercise special criminal jurisdiction over certain crimes of domestic and dating violence, regardless of the defendant’s Indian or non-Indian status, under a pilot project authorized by the Violence Against Women Reauthorization Act of 2013 (VAWA 2013).
“This is just the latest step forward in this administration’s historic efforts to address the public safety crisis in Indian country,” said Attorney General Eric Holder. “Every day, we’re working hard to strengthen partnerships with tribal leaders and confront shared challenges – particularly when it comes to protecting Indian women and girls from the shocking and unacceptably high rates of violence they too often face. With the important new tools provided by the Violence Against Women Reauthorization Act of 2013, these critical pilot projects will facilitate the first tribal prosecutions of non-Indian perpetrators in recent times. This represents a significant victory for public safety and the rule of law, and a momentous step forward for tribal sovereignty and self-determination.”
Although the provisions authorizing the special jurisdiction take effect generally in March 2015, the law also gives the Attorney General discretion to grant a tribe’s request to exercise the jurisdiction earlier, through a voluntary pilot project. The authority to approve such requests has been delegated to Associate Attorney General Tony West. Associate Attorney General West today congratulated tribal leaders on this historic achievement in letters to the three tribes.“The old jurisdictional scheme failed to adequately protect the public – particularly native women – with too many crimes going unprosecuted and unpunished amidst escalating violence in Indian Country,” stated Associate Attorney General West. “Our actions today mark a historic turning point. We believe that by certifying certain tribes to exercise jurisdiction over these crimes, we will help decrease domestic and dating violence in Indian Country, strengthen tribal capacity to administer justice and control crime, and ensure that perpetrators of sexual violence are held accountable for their criminal behavior.”
Since the Supreme Court’s 1978 opinion in Oliphant v. Suquamish Indian Tribe, tribes have been prohibited from exercising criminal jurisdiction over non-Indian defendants. This included domestic violence and dating violence committed by non-Indian abusers against their Indian spouses, intimate partners, and dating partners. Even a violent crime committed by a non-Indian husband against his Indian wife, in the presence of her Indian children, in their home on the Indian reservation, could not be prosecuted by the tribe. In granting the pilot-project requests of the Pascua Yaqui, Tulalip, and Umatilla tribes today, the United States is recognizing and affirming the tribes’ inherent power to exercise “special domestic violence criminal jurisdiction” (SDVCJ) over all persons, regardless of their Indian or non-Indian status, for crimes committed on or after Feb. 20, 2014.
As described in the Department of Justice’s Final Notice on the pilot project, today’s decisions are based on a diligent, detailed review of application questionnaires submitted by the tribes in December 2013, along with excerpts of tribal laws, rules, and policies, and other relevant information. That review, conducted in close coordination with the Department of the Interior and after formal consultation with affected Indian tribes, led the Justice Department to determine that the criminal justice systems of the Pascua Yaqui, Umatilla, and Tulalip tribes have adequate safeguards in place to fully protect defendants’ rights under the Indian Civil Rights Act of 1968, as amended by VAWA 2013.
The Department of Justice is posting notices of the pilot-project designation on the Tribal Justice and Safety website and in the Federal Register. In addition, each tribe’s application questionnaire and related tribal laws, rules, and policies will be posted on the Web site. These materials will serve as a resource for those tribes that may also wish to participate in the pilot project or to commence exercising SDVCJ in March 2015 or later, after the pilot project has concluded.
For more information on VAWA 2013, please visit http://justice.gov/tribal/vawa-tribal.html.
Georgia Dentist Pleads Guilty to Tax EvasionRead the Press Release
Dr. Dayo Obebe of Muscogee County, Ga., pleaded guilty today in federal court in Columbus, Ga., to one count of tax evasion, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.
According to court documents, Obebe is a dentist licensed in Georgia and Alabama, where he operated the Moon Road Cosmetic & Family Dentistry in Columbus, Ga., and the Brent Dental Dentistry in Brent, Ala. In 2004, Obebe began intentionally concealing money he earned from patients who paid with credit cards from his accountants and the IRS by placing credit card payments into a separate bank account from other cash and check receipts. Consequently, Obebe intentionally underreported his total income from the dental practice on his 2004, 2005 and 2006 federal income tax returns by more than $500,000 and falsely claimed a tax refund.
In 2007, the IRS audited Obebe’s tax return. In 2008 Obebe lied during an audit when he stated that he accurately reported his income on his tax return, when he knew that he had earned substantially more income over the three-year period than he had reported to the IRS. In total, Obebe evaded paying over $185,000 in tax to the IRS on his 2004, 2005 and 2006 federal income tax returns.
Obebe faces a statutory maximum sentence of five years in prison, three years of supervised release and a $250,000 fine. In addition, according to the plea agreement, he has agreed to pay restitution to the IRS in the amount of $189,661. Sentencing has not been scheduled.
The case was investigated by special agents of the IRS - Criminal Investigation, and Trial Attorneys Charles Edgar and Justin Gelfand for the Tax Division are prosecuting the case.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax.
California Woman Sentenced in Fraudulent Tax Refund SchemeRead the Press Release
U.S. District Judge D. Lowell Jensen sentenced Noemi Rubio Baez, of Salinas, Calif., to serve 30 months in prison for her involvement in a stolen identity tax refund fraud scheme, Assistant Attorney General Kathryn Keneally for the Justice Department’s Tax Division and U.S. Attorney Melinda Haag for the Northern District of California announced that today. Baez was also ordered to serve three years supervised release and to pay $703,536.86 in restitution to the Internal Revenue Service (IRS). Baez pleaded guilty on Oct. 31, 2013, to conspiring to file false claims for tax refunds with the IRS and to aggravated identity theft.
According to the plea agreement, beginning around Feb. 28, 2008, and continuing through April 16, 2012, Baez and a co-conspirator participated in a scheme to obtain and help others to obtain false claims from the IRS by electronically filing false federal income tax returns in her own name and in the names of others. Baez and her co-conspirator created false income information in the names and Social Security numbers of multiple individuals, and filed materially false tax returns with the IRS that claimed refunds derived from tax credits including the Earned Income Credit, the Additional Child Tax Credit and the Making Work Pay Credit.
According to court documents, in some instances, the taxpayers requested the returns be prepared, but in others, the taxpayers did not provide Baez or her co-conspirator with their personal identification information and were unaware that the returns had been filed in their names. Baez and her co-conspirator filed more than 150 false and fraudulent returns with false claims totaling more than $400,000.
Assistant Attorney General Keneally and U.S. Attorney Haag thanked special agents of the IRS - Criminal Investigation who investigated the case, and Trial Attorneys Charles O’Reilly, Erin S. Mellen and Sonia M. Owens for the Tax Division, who prosecuted the case.
W.R. Grace Pays over $63 Million Toward Cleanup and Restoration of Hazardous Waste Sites in Communities Across the CountryRead the Press Release
W.R. Grace & Co, based in Columbia, Md., paid over $63 million to the U.S. government under its bankruptcy plan of reorganization to resolve claims for environmental cleanups at approximately 39 sites in 21states, the U.S. Department of Justice and U.S. Environmental Protection Agency (EPA) announced today.
“Communities across the United States will benefit from this payment of present and future cleanup costs,” said Robert G. Dreher, Acting Assistant Attorney General for the Environment and Natural Resources Division. “The Justice Department is committed to holding polluters responsible for their environmental legacy, and won’t just walk away leaving taxpayers to pick up the tab.”
“Cleaning up toxic pollution in communities is the responsibility of the company that created it, not the American taxpayer,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “This money will be used to clean up contaminated sites and to make a tangible difference for local communities across the country.”
W.R. Grace’s payment includes approximately $54 million for the EPA. The company agreed to pay another $9 million to other federal agencies, including the U.S. Department of Interior and the U.S. Army.
W.R. Grace, a global supplier of specialty chemicals, and 61 affiliated companies filed for bankruptcy in April 2001. In 2003, EPA filed claims against the company to recover past and future cleanup costs at sites contaminated by asbestos and other hazardous substances.
Numerous agreements to resolve the agency’s environmental liability claims against the company and its affiliates were negotiated as part of the company’s bankruptcy proceedings between April 2008 and February 2013. The company continues to be responsible for all of the sites it owns or operates and for any additional sites that were not known or resolved under the earlier settlements.
W.R. Grace’s liability for asbestos contamination in the town of Libby, Mont., was addressed in a separate June 2008 settlement that resulted in a payment of $250 million to EPA. W.R. Grace continues to be responsible for addressing cleanup at the Libby Mine.
The approximately $54 million payment to EPA will reimburse the agency for cleanup costs or provide funds for future cleanup at the following Superfund sites:Acton Plant - Acton, Mass.
Amber Oil - Milwaukee, Wis.
Aqua Tech - Greer, S.C.
Big Tex Site - San Antonio, Texas
Blackburn and Union Privileges - Walpole, Mass.
Cambridge,Plant, Cambridge, Mass.
Casmalia Resources - Santa Barbara, Calif.
Central Chemical - Hagerstown, Md.
Galaxy/Spectron - Elkton, Md.
Green River - Maceo, Ky.
Harrington Tools - Glendale, Calif.
Intermountain Insulation - Salt Lake City, Utah
IWI Site - Summit, Ill.
Li Tungsten - Glen Cove, N.Y.
Malone Services Co. - Texas County, Texas
Massachusetts Military Reservation (MMR) – Barnstable County, Mass.
N-Forcer Site - Dearborn, Mich.
Operating Industries, Inc. - Monterey Park, Calif.
R & H Oil/Tropicana - San Antonio, Texas
RAMP Industries - Denver, Colo.
Reclamation Oil - Detroit, Mich.
Robinson Insulation - Minot, N.D.
Solvents Recovery Service of NE - Southington, Conn.
Vermiculite Exfoliation Site – Nashville, Tenn.
Vermiculite Expansion Site – High Point, N.C.
Vermiculite Intermountain - Salt Lake City, Utah
Vermiculite Northwest - Spokane, Wash.
Watson Johnson LF - Richland Township, Pa.
Wells G & H (Source & Central Areas) - Woburn, Mass.
Western Minerals Processing - Denver, Colo.
Western Minerals Products - Minneapolis, Minn.
W.R. Grace – Weedsport, N.Y.
Zonolite - Wilder, Ky.
Zonolite/W.R. Grace – Easthampton, Mass.
Zonolite - Prince George’s Co., Md.
Zonolite - Hamilton Township, N.J.
Zonolite - Ellwood City, Pa.
Zonolite - New Castle, Pa.
Zonolite Road – Atlanta, Ga.
More information on W.R. Grace’s payments to EPA under their plan of reorganization : http://www2.epa.gov/enforcement/case-summary-epa-receives-over-54-million-wr-grace-bankruptcy .
More information on Cleanup Enforcement : http://www2.epa.gov/enforcement/waste-chemical-and-cleanup-enforcement#cleanup .South Florida Resident Convicted in Connection with International Fraudulent Lottery SchemeRead the Press Release
A federal jury in Miami today convicted a South Florida resident for her role in an international fraudulent lottery scheme that targeted U.S. citizens, the Justice Department announced. Charmaine Anne King, 51, of Lauderdale Lakes, Fla. was convicted of one count of conspiracy, three counts of mail fraud and two counts of wire fraud. The case is part of the government’s crackdown on international fraudulent lottery schemes.A federal grand jury returned an indictment against King and a co-conspirator on Oct. 31, 2013, charging that King’s co-conspirators contacted individuals in the U.S. and falsely informed them that they had won more than a million dollars in a lottery. The evidence at trial showed that a co-conspirator sent letters to the victims from a purported sweepstakes company in the U.S. and included false and fraudulent cashier’s checks made out to the victims for thousands of dollars. These letters instructed victims to call “claims agents” who were actually co-conspirators, and when the victims called the purported claims agents, the agents informed the victims that they had to pay several thousand dollars in fees in order to collect their purported lottery winnings. The claims agents told the victims to deposit the cashier’s checks in the victims’ bank accounts in order to purportedly cover the money they had to pay. The co-conspirators instructed the victims on how to send and wire this money to King and others.
Evidence presented at trial showed that King kept a percentage of the money she received from victims and sent the rest of the money to a co-conspirator. King continued to participate in this scheme even after the U.S. Postal Inspection Service verbally informed her that she was participating in unlawful activity, and after she later signed a Cease and Desist Order requiring that she stop receiving money from victims of fraud. The Cease and Desist Order that King signed referenced a complaint detailing the activity that the U.S. Postal Inspection Service explained was unlawful.
As the evidence presented at trial showed, the cashier’s checks victims received from the fraudulent lottery had no value. The evidence demonstrated that after the victims sent money to King, the fraudulent cashier’s checks bounced. Victims never received any lottery winnings.
King faces a maximum sentence of 25 years in prison on each count of conviction, a fine and mandatory restitution. King’s sentencing has been scheduled for April 17, 2014.
Also, on Feb. 4, 2014, U.S. District Court Judge K. Michael Moore adopted a report and recommendation accepting the guilty plea of King’s co-defendant, Althea Peart. Peart had entered a change of plea to guilty on Jan. 9, 2014, to one count of conspiracy to commit mail and wire fraud. She is scheduled to be sentenced on March 20, 2014.
Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division, commended the investigative efforts of the U.S. Postal Inspection Service, Homeland Security Investigations and the U.S. Marshals Service. The case is being prosecuted by Assistant Director Jeffrey Steger and Trial Attorney Kathryn Drenning with the Department of Justice’s Civil Division, Consumer Protection Branch.
Consumers should report telemarketing fraud, including lottery fraud originating from Jamaica, to the Federal Trade Commission at 1-877-FTC-HELP (1-877-382-4357) or online at https://www.ftccomplaintassistant.gov .
Former Tennessee Police Officer Sentenced for Assaulting an ArresteeRead the Press Release
Christopher Eugene Reynolds, 39, a former police officer of the Selmer, Tenn., Police Department (SPD), was sentenced today by U.S. District Judge J. Daniel Breen to serve one year and one day in prison following his conviction for violating the civil rights of an arrestee, the Justice Department announced. Reynolds pleaded guilty Nov. 6, 2013. Judge Breen also sentenced Reynolds to a period of two years supervised release and a $100 special assessment.
“The majority of law enforcement officers do not abuse their authority, however, the defendant has admitted that he wrongfully assaulted an arrestee,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The Justice Department will continue to vigorously prosecute officers who use their official position to violate the civil rights of those in their custody.”
Reynolds admitted that on April 28, 2011, while using his authority as a SPD officer, he slammed a handcuffed arrestee to the floor of the McNairy Regional Hospital and struck him once in the face. According to information presented in court, Reynolds acknowledged that this assault was unreasonable, did not serve a legitimate law enforcement purpose and was not made by accident, mistake or inadvertence.
Reynolds was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.
This case was investigated by FBI Special Agent Christopher Miller with the assistance of the Tennessee Bureau of Investigation. The case was prosecuted by Trial Attorney Ryan J. Murguía for the Civil Rights Division and Special Litigation Counsel Gerard V. Hogan, with the assistance of Assistant U.S. Attorney Victor L. Ivy for the Western District of Tennessee.
Citgo Sentenced to Pay More Than $2 Million for Environmental Crimes at Corpus Christi, Texas, RefineryRead the Press Release
CITGO Petroleum Corporation and CITGO Refining and Chemicals Company LLP (CITGO) were sentenced in U.S. District Court in Corpus Christi for violations of the Clean Air Act related to its illegal operation of two massive tanks at their Corpus Christi East Plant Refinery as oil water separators without the required emission control equipment. The failure to equip the tanks with emission controls exposed numerous residents in the Oak Park and Hillcrest communities to chemical emissions.
CITGO Petroleum Corporation was ordered to pay a fine of $500,000 on each of the two Clean Air Act counts of conviction. CITGO Refining and Chemicals Company LLP was ordered to pay a fine of $500,000 on each of the federal Clean Air Act counts of conviction plus $15,000 on each of the three misdemeanor Migratory Bird Treaty Act conviction, for a total of $45,000.
In handing down the sentence, U.S. District Judge John D. Rainey deferred his ruling on victim restitution and a remedial order and will issue a written order on those issues within the next 90 days. Approximately 80 victims appeared in the full court room.
In June 2007, a jury convicted CITGO for illegally operating the two tanks at their Corpus Christi East Plant Refinery between January 1994 and May 2003. The open top tanks were the source of emissions including benzene, a known carcinogen, and other volatile organic compounds, which affected persons in the surrounding communities. Texas state investigators testified at the trial that they traced emissions that caused burning eyes, sore throat, difficulty breathing and other acute health effects back to the tanks on several occasions. The emissions from the tanks were detected in Oak Park and Hillcrest in the form of strong gaseous type odors.
“CITGO’s illegal and careless operation of two massive tanks without emission controls exposed residents – the company’s neighbors – in the Oak Park and Hillcrest communities of Corpus Christi to unacceptable health impacts from toxic chemical emissions,” said Acting Assistant Attorney General Robert G. Dreher of the Justice Department’s Environment and Natural Resources Division. “I am grateful to the prosecutors, the victim specialists and the federal and state investigators for fighting tirelessly for justice for these residents who deserve to breathe clean air and to be protected under the nation’s Clean Air Act.”
“The stories from victims in this case are a powerful reminder of why we protect clean air for all Americans,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “Facilities that operate in our backyards, especially in overburdened communities, have a responsibility to follow the nation’s environmental laws. Today’s sentencing supports our commitment to reduce pollutants from the air we breathe, and to fight for those most vulnerable to pollution.”
The Department of Justice, The U.S. Attorney’s Office Victim Witness Section, the U.S. Environmental Protection Agency Criminal Investigation Division (EPA/CID), the Texas Commission on Environmental Quality Environmental Crimes Unit and the Federal Bureau of Investigation assisted by the Texas Environmental Crimes Task Force (which also includes agents from U.S. Fish and Wildlife Service and Texas Parks and Wildlife Department) held three days of community meetings in Corpus Christi, Texas, on Oct. 25-27, 2012, to identify area residents who suffered immediate negative health effects from emissions from the CITGO refinery in order to comply with an order by U.S. District Judge John D. Rainey to make members of the community aware of their potential victim rights, and followed similar meetings held in 2007. Individuals who suffered acute health effects from the emissions prepared victim impact statements for submission to the district court.
On Oct. 11-13, 2013, the same government agencies assisted approximately 90 of the identified victims who were permitted to address Judge Rainey as a part of the sentencing process, which occurred over a three week period. During the hearing, victims told Judge Rainey of the difficulty of living in Hillcrest and Oak Park during the time the tanks were being operated illegally. Residents spoke of the sore throats, difficulty breathing, burning eyes, skin rashes and damage to property caused by the chemical emissions that were coming from the tanks.Justice Department Settles with Rite Aid of Michigan over Alleged HIV DiscriminationRead the Press Release
The Justice Department announced today that, as part of its Barrier-Free Health Care Initiative, it has reached a settlement with Rite Aid of Michigan to resolve claims that Rite Aid violated the Americans with Disabilities Act (ADA).
The department found that a Rite Aid store pharmacist in Okemos, Mich., discriminated against a customer with HIV by refusing to administer a flu shot to the customer. Although the pharmacist had access to surgical gloves, she told the customer that she needed “special gloves” to administer a flu shot to him, and that he should return after the store had ordered the gloves.
“Erecting unfair and discriminatory barriers to medical care for people with HIV is unacceptable,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The ADA prohibits these types of barriers, and the Justice Department will fight to tear them down.”
Under the terms of the settlement agreement, Rite Aid of Michigan must pay $10,000 to the customer and $5,000 in civil penalties. In addition, Rite Aid must train its staff on the requirements of the ADA and implement an anti-discrimination policy.
Title III of the ADA prohibits public accommodations such as Rite Aid of Michigan from excluding people with disabilities, including people with HIV, from enjoying goods, services, privileges, facilities, advantages and accommodations provided. For more information regarding the department’s efforts to combat HIV discrimination, please visit www.ada.gov/aids/ada_aids_enforcement.htm To learn more about the obligations of public accommodations under federal disability rights statutes, call the department’s toll-free ADA information line at 800-514-0301, 800-514-0383 (TTY) or access the ADA website at www.ada.gov
Justice Department Files Fair Housing Lawsuit Against Owner and Managers of Illinois Mobile Home Park for Discriminating Against African-Americans and Families with ChildrenRead the Press Release
The Justice Department filed a lawsuit today against the owner and those responsible for the management of a 126-space mobile home park in Effingham, Ill., for violating the Fair Housing Act (FHA) by discriminating against African-Americans and families with children.
“People should not be denied the housing of their choice because of their race or because they have children,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The Justice Department will continue its vigorous enforcement of the Fair Housing Act, which outlaws such discrimination.
“America’s strength is in its diversity,” said U.S. Attorney Stephen R. Wigginton for the Southern District of Illinois. “The Southern District of Illinois recognizes that our nation, our district and our communities depend upon each and every person being afforded the basic rights that this country gives them. As such, my office is proud to defend everyone’s right to live where they want, free from discrimination.”
The lawsuit, filed in the U.S. District Court for the Southern District of Illinois, charges that owner Lorraine Wallschlaeger, manager Barbara Crubaugh and David Crubaugh, another employee with management responsibilities, engaged in a pattern or practice of violating the FHA by imposing requirements on African-Americans interested in living at Four Seasons Estates Mobile Home Park that they did not impose on white prospective tenants, such as completing a written application and having their mobile homes inspected before being accepted into the park. The suit also charges that the defendants threatened to evict a white resident and his niece from the park if her African-American boyfriend did not leave, and refused to register the African-American boyfriend as a resident.
In addition, the lawsuit alleges that the defendants did not permit families with children to live on one of the four rows at the mobile home park.
The lawsuit arose after the residents who were subjected to the discriminatory conduct contacted HOPE Fair Housing Center, an organization in Illinois that advocates for equal opportunity in housing, who in turn contacted the Justice Department. Some of the evidence leading to the filing of today’s lawsuit came from statements made by Four Seasons officials to testers, individuals who pose as renters to gather information about possible discriminatory practices. The testing evidence in this case was developed by the department’s Fair Housing Testing Program.
The lawsuit seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions and a civil penalty. Any individuals who have information relevant to this case are urged to contact the Housing and Civil Enforcement Section of the Civil Rights Division at 1-800-896-7743, mailbox #94.
The federal FHA prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt. Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected] or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.
JPMorgan Chase to Pay $614 Million for Submitting False <br /> Claims for FHA-insured and VA-guaranteed Mortgage LoansRead the Press Release
The Department of Justice today announced that JPMorgan Chase (JPMC) will pay $614 million for violating the False Claims Act by knowingly originating and underwriting non-compliant mortgage loans submitted for insurance coverage and guarantees by the Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA). JPMC is a bank and financial services company headquartered in New York.
“The resolution announced today is a product of the Justice Department’s continuing efforts to hold accountable those whose conduct contributed to the financial crisis,” said Associate Attorney General Tony West. “This settlement recovers wrongfully claimed funds for vital government programs that give millions of Americans the opportunity to own a home and sends a clear message that we will take appropriately aggressive action against financial institutions that knowingly engage in improper mortgage lending practices.”
“The Department of Justice will continue to hold accountable financial institutions whose irresponsible mortgage lending undermines the housing market and costs the taxpayers many millions of dollars,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “I thank U.S. Attorney Bharara and his team for their stellar efforts in this case and look forward to our coordinated efforts in these cases.”
As part of the settlement, which was handled by the U.S. Attorney’s Office for the Southern District of New York, JPMC admitted that, for more than a decade, it approved thousands of FHA loans and hundreds of VA loans that were not eligible for FHA or VA insurance because they did not meet applicable agency underwriting requirements. JPMC further admitted that it failed to inform the FHA and the VA when its own internal reviews discovered more than 500 defective loans that never should have been submitted for FHA and VA insurance.
“For years, JPMorgan Chase has enjoyed the privilege of participating in federally subsidized programs aimed at helping millions of Americans realize the dream of homeownership,” said U.S. Attorney for the Southern District of New York Preet Bharara. “Yet, for more than a decade, it abused that privilege. JPMorgan Chase put profits ahead of responsibility by recklessly churning out thousands of defective mortgage loans, failing to inform the government of known problems with those loans and leaving the government to cover the losses when the loans defaulted. With today’s settlement, however, JPMorgan Chase has accepted responsibility for its misconduct and has committed to reform its business practices. This settlement adds to the list of successful mortgage fraud cases this office has pursued.”Beginning as early as 2002, JPMC falsely certified that loans it originated and underwrote were qualified for FHA and VA insurance and guarantees. As a consequence of JPMC’s misrepresentations, both the FHA and the VA incurred substantial losses when unqualified loans failed and caused the FHA and VA to cover the associated losses.
“This settlement with JP Morgan Chase will enable HUD to recover funds lost due to Chase’s past unacceptable mortgage underwriting practices,” said HUD’s Acting General Counsel Damon Smith. “In addition, Chase must now institute new and tighter controls to prevent abuses of FHA’s automated underwriting system. HUD will continue working with the Department of Justice to ensure that lenders are held accountable and are required to institute practices that will benefit both borrowers and the FHA insurance fund.”
“The agreement reached with JPMC was possible due to the dedication of the U.S. Attorney’s Office for the Southern District of New York and the hard work of the talented staff at the Office of Inspector General,” said Inspector General of the Department of Housing and Urban Development David A. Montoya. “It also demonstrates the combined commitment of the Justice Department and the Office of Inspector General to continuing efforts to enforce FHA mortgage insurance requirements.”
The FHA’s Single Family Mortgage Insurance Program enables low- and moderate- income borrowers to purchase homes by insuring qualified loans made by participating lenders, such as JPMC, against losses if the loans later default. A participating lender may only submit to the FHA creditworthy loans meeting certain requirements and must maintain a quality control program that can prevent and correct any deficiencies in the lender’s underwriting practices. The VA’s Loan Guaranty Program provides similar assistance to veterans, service members and qualifying surviving spouses.
“I commend the efforts of the United States Attorney’s Office for the Southern District of New York to hold lenders accountable for conduct that defrauds the government and deserving veterans who rely on VA’s Loan Guaranty Program to purchase their homes,” said Acting Inspector General for the Office of Inspector General, Department of Veterans Affairs Richard J. Griffin.
The settlement resolves allegations in a complaint filed by a private whistleblower.
Today’s settlement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorney’s Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov .This settlement was the result of a coordinated effort among the U.S. Attorney’s Office for the Southern District of New York , the department’s Civil Division, the Department of Housing and Urban Development’s Inspector General and the Department of Veterans Affairs’ Inspector General.
Indiana Law Enforcement Human Trafficking Task Force Announces First Federal ChargesRead the Press Release
The Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Southern District of Indiana announced the filing of a nine count federal indictment this afternoon against Jerry Mitchell, aka Tre da Great, age 24, of Indianapolis. The charges include sex trafficking, sex trafficking of a child, transporting a child to engage in prostitution and the production of child pornography. The indictment follows Mitchell’s arrest by Indianapolis law enforcement and the filing of charges by Marion County Prosecutor Terry Curry, and comes as federal and local authorities have joined forces to combat human trafficking and child exploitation.
“This indictment shows the importance of partnerships across all levels to address the horrific crime of human trafficking,” said Acting Assistant Attorney General Jocelyn Samuels for the division. “The Civil Rights Division and U.S. Attorneys offices across the country will continue their aggressive work to combat these types of crimes.”
“The scourge of human trafficking is a global crisis, but the fight against modern day slavery begins right here at home,” said U.S. Attorney Joseph H. Hogsett for the Southern District of Indiana. “That is why we have teamed up with law enforcement partners across this state and around the country to combat the types of horrific abuse that are alleged in this case.”
According to the federal indictment and state probable cause affidavit, an investigation into Mitchell’s alleged criminal activity began in July 2013, when officers with the Indianapolis Metropolitan Police Department were flagged down and informed by a woman that her niece, a reported runaway, had returned home and reported she had been the victim of sexual assault. Further investigation resulted in the identification of a suspect who went by the name of Tre, an alleged alias of Mitchell, as well as information indicating that the defendant was running a prostitution operation in the near-northside area of Indianapolis.
The indictment alleges that from May 2013 through June 27, 2013, Mitchell engaged in sex trafficking by means of force, fraud or coercion. The allegations include the trafficking of females between the ages of 19 and 21, as well as three minors aged 12, 16 and 17. Mitchell also allegedly transported the minors to facilitate their prostitution activities and sexually assaulted these female minors on a number of occasions. The federal indictment alleges that on June 22, 2013, Mitchell also made a video recording the sexual abuse of the 12-year-old female victim.
Mitchell had an initial appearance before a federal magistrate judge in Indianapolis this afternoon, and was ordered detained pending trial. Mitchell faces a statutory maximum sentence of life in federal prison if convicted of all counts. Under federal law, the defendant would be required to serve a minimum of 85 percent of his prison term within a correctional facility.
This case was the result of a collaborative investigation spearheaded by the Indiana Protection for Abused and Trafficked Humans (IPATH) Task Force, one of 42 task forces nationwide funded by the Department of Justice to address the issue of human trafficking. IPATH was created in 2006 and is chaired by the U.S. Attorney’s Office and the Indiana Attorney General’s Office. The group meets regularly to collaborate on cases and projects, provide additional training to law enforcement and raise awareness in our community about human trafficking.
Informations, indictments and criminal complaints are only a charge and are not evidence of guilt. A defendant is presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.
Court Bars N.C. Tax Return Preparer from Preparing Returns for OthersRead the Press Release
Today, a federal court in the Eastern District of North Carolina permanently barred Sharon D. Rhodes and her businesses, R&S Freedom Tax Service and Changing Faces Annoited Tax Services, from preparing tax returns for others. Rhodes consented to the entry of the injunction without admitting she was guilty of the allegations against her.
According to the complaint, Rhodes prepared over 600 tax returns for the 2008 through 2010 tax years. The complaint alleges that Rhodes prepared returns claiming false charitable deductions and false credits such as the Earned Income Tax Credit and education credits. Rhodes also allegedly improperly understates her customers’ federal tax liabilities by creating phony businesses and then listing those fake businesses on returns and fabricating expenses and losses for them. The United States contended that the false items generated larger refunds for Rhodes’ customers than they were entitled to receive, and that the losses to the U.S. Treasury could amount to as much as $3 million.
Return preparer fraud is one of the IRS' Dirty Dozen Tax Scams for 2013, which can be viewed at www.irs.gov/uac/Newsroom/IRS-Releases-the-Dirty-Dozen-Tax-Scams-for-2013 . The IRS has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional . In the past decade, the Justice Department's Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website at www.justice.gov/tax/taxpress2013.htm .
Related Materials:
United States v. Sharon D. Rhodes
Agreed Final Judgment of Permanent Injunction and Order Against Sharon D. RhodesArmy Soldier Sentenced on Bribery Charges for Facilitating Thefts of Fuel in AfghanistanRead the Press Release
A former U.S. Army soldier was sentenced to serve 87 months in prison for her role in stealing fuel at Forward Operating Base (FOB) Fenty, Afghanistan, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division announced today.
Former U.S. Army Specialist Stephanie Charboneau, 35, of Colorado Springs, Colo., was sentenced on Feb. 3, 2014, by U.S. District Court Philip A. Brimmer. Charboneau pleaded guilty on Sept. 5, 2013.
According to court documents, from approximately February through May 2010, Charboneau was involved in overseeing the delivery of fuel from FOB Fenty to other military bases. As part of this process, documents generally described as “transportation movement requests” (TMRs or mission sheets) were created to authorize the movement of fuel.
According to court documents, Charboneau conspired with others to steal and sell fuel. The essence of the scheme was that the conspirators would create fraudulent TMRs that purported to authorize the transport of fuel from FOB Fenty to other military bases, even though no legitimate fuel transportation mission was required. After the trucks were filled with fuel, the fraudulent TMRs were used by the drivers of the fuel trucks at FOB Fenty’s departure checkpoint to justify the trucks’ departures from FOB Fenty. In truth, the fuel was simply stolen, and the conspirators would receive money from the trucking company that stole the fuel.
Charboneau pleaded guilty to bribery and conspiracy to commit bribery for having received payments from a representative of the trucking company in exchange for facilitating the theft of approximately 70 truckloads of fuel. According to court documents, the loss to the United States as a result of the thefts was in excess of $1,225,000.
Charboneau’s plea was the fourth guilty plea arising from the investigation of fuel thefts at FOB Fenty. On Aug. 3, 2012, Jonathan Hightower, a civilian employee of a military contractor who had conspired with Charboneau, pleaded guilty to similar charges. After cooperating with the government, he was sentenced to serve 24 months in prison on Oct. 28, 2013. On Oct.10, 2012, Christopher Weaver, who also conspired with Charboneau, pleaded guilty to fuel theft charges, and, after cooperating with the government, was sentenced to serve 37 months in prison on Oct. 28, 2013. Both Weaver and Hightower were prosecuted in the United States District Court for the District of Colorado. On Aug. 29, 2013, Sergeant Bilal Kevin Abduallah, who succeeded Charboneau at FOB Fenty, pleaded guilty in the United States District Court for the Western District of Kentucky to fuel theft-related charges. His sentencing is set for Feb. 12, 2014.
The cases were investigated by the Special Inspector General for Afghanistan Reconstruction (SIGAR); the Department of the Army, Criminal Investigations Division (CID); the Defense Criminal Investigative Service; and the Federal Bureau of Investigation.
These cases were handled by Special Trial Attorney Mark H. Dubester of the Criminal Division’s Fraud Section, who is on detail from SIGAR.Leader of $28.3 Million Medicare Fraud Scheme Pleads GuiltyRead the Press Release
A Florida man who had been the owner and operator of multiple physical therapy rehabilitation facilities pleaded guilty today for his role in organizing and leading a $28.3 million Medicare fraud scheme involving physical and occupational therapy services.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting U.S. Attorney A. Lee Bentley III of the Middle District of Florida, Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office and Special Agent in Charge Christopher B. Dennis of the U.S. Health and Human Services Office of Inspector General (HHS-OIG) region including all of Florida made the announcement.
Luis Duluc, 53, formerly of southwest Florida, pleaded guilty in the U.S. District Court for the Middle District of Florida to conspiracy to commit health care fraud and making a false statement relating to health care matters. His sentencing date will be set by the court. He faces a maximum penalty of 15 years in prison.
According to documents filed in the case, Duluc and his co-conspirators used various physical therapy clinics and other business entities throughout Florida and elsewhere to submit approximately $28,347,065 in fraudulent reimbursement claims to Medicare from 2005 through 2009. Medicare paid approximately $14,424,865 on those claims.
Duluc was chairman and president of a Delaware holding company known as Ulysses Acquisitions Inc. Duluc and his co-conspirators used Ulysses Acquisitions to purchase comprehensive outpatient rehabilitation facilities (CORFs) and outpatient physical therapy providers (OPTs) including West Coast Rehab Inc. in Fort Myers, Fla.; Rehab Dynamics Inc. in Venice, Fla.; Polk Rehabilitation Inc. in Lake Wales, Fla.; and Renew Therapy Center of Port St. Lucie LLC in Port St. Lucie, Fla., in order to gain control of these clinics’ Medicare provider numbers.
Working with co-conspirators in Miami and elsewhere, Duluc obtained identifying information of Medicare beneficiaries by paying kickbacks and stealing beneficiaries’ identifying information. Duluc and his co-conspirators also obtained unique identifying information of physicians. They then used this information to create and submit false claims to Medicare through the clinics Ulysses Acquisitions purchased. These claims sought reimbursement for therapy services that were not legitimately prescribed and not actually provided. The conspirators created and used false and forged patient records in an effort to conceal the fact that services had not actually been provided.
Part of the conspiracy included what came to be known as the 80/20 deal, which Duluc developed and marketed. The 80/20 deal involved extensive kickback arrangements with co-conspirators who owned other therapy clinics that were used to further the overall fraud scheme. For example, Duluc and co-conspirators used the clinics they controlled to submit false reimbursement claims to Medicare on behalf of Miami-based therapy clinics such as Hallandale Rehabilitation Inc., Tropical Physical Therapy Corporation, American Wellness Centers Inc., and West Regional Center Inc. Duluc and co-conspirators would retain approximately 20 percent of the money Medicare paid on these claims and pay the other 80 per cent of the fraud proceeds to the co-conspirator clinic owners.
When Duluc and his co-conspirators were done using the clinics they acquired through Ulysses Acquisitions, they engaged in sham sales of the clinics to nominee or straw owners, all of whom were recent immigrants to the United States who had no background or experience in the health care industry. Duluc did this in an effort to try to disassociate himself from the fraudulent operations of the rehabilitation facilities.
This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida. This case is being prosecuted by Trial Attorneys Christopher J. Hunter and Andrew H. Warren of the Criminal Division’s Fraud Section and Assistant United States Attorney Simon A. Gaugush of the U.S. Attorney’s Office for the Middle District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov .Las Vegas Attorney Pleads Guilty <br /> for Role in Multimillion-Dollar FraudRead the Press Release
A Las Vegas attorney pleaded guilty today for his role in multiple schemes to defraud his clients, to defraud the IRS and to fraudulently gain control of condominium homeowners’ associations (HOAs) in the Las Vegas area to ensure that the HOAs would steer business to a certain law firm and a certain construction company.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Special Agent in Charge Laura Bucheit of the FBI’s Las Vegas Field Office, Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department and Acting Special Agent in Charge Shea Jones of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.
Barry Levinson, 47, pleaded guilty before U.S. District Judge James C. Mahan in the District of Nevada to one count of conspiracy to commit mail and wire fraud. Levinson is the 30th person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area. Levinson simultaneously pleaded guilty to one count of tax evasion and one count of wire fraud, with the latter charge relating to his embezzlement of his legal clients’ funds.
Levinson admitted that from approximately August 2003 through February 2009, he participated in a scheme to control various HOA boards of directors so that the HOA boards would award the handling of construction-related lawsuits and remedial construction contracts to his law firm and construction company designated by Levinson’s co-conspirators. This scheme was carried out in part by straw buyers who purchased properties in their names that were in reality paid for and controlled by other co-conspirators. According to plea documents, Levinson’s co-conspirators managed and operated the payments associated with maintaining straw properties by running a so-called “Bill Pay Program,” by which co-conspirators funded the properties through several limited liability companies at the direction of a co-conspirator. Many of the payments were wired from California to Nevada.
Levinson admitted that he was hired to represent the Park Avenue condominium complex, but he treated a co-conspirator as his client rather than the HOA itself. Levinson also admitted that several of his co-conspirators rigged an HOA board election at Park Avenue. Levinson admitted that, after a lawsuit was filed by the homeowners and a special election master was designated for the make-up election, he attempted to bribe the special election master.
Similarly, Levinson admitted that after a rigged election at the Pebble Creek HOA, the homeowners filed a recall petition. Levinson was hired as the HOA general counsel at the direction of a co-conspirator and took several steps to deter the recall election, including firing the property management company and filing a lawsuit to stop the recall election.
Related to the tax evasion charge, Levinson admitted that he failed to file taxes for the 2005 to 2010 tax years and filed a false 2011 tax return. Levinson also admitted that he took affirmative steps to evade taxes for the tax years 2009, 2010 and 2011, including concealing cash earnings from the IRS and telling the IRS that his business was no longer operating.
Finally, related to the wire fraud charge, Levinson admitted that between March 2010 and September 2011, he embezzled nearly $180,000 from at least nine different minor personal injury clients. Levinson also admitted that he stole another $65,000 from an individual for whom he was serving as an escrow agent.
As part of the plea agreement, Levinson has agreed to be disbarred by the State Bar of Nevada.
Levinson’s sentencing is scheduled for May 5, 2014. The maximum sentence for conspiracy to commit mail fraud and wire fraud is 30 years in prison. The maximum sentence for attempting to evade or defeat federal taxes is five years in prison. The maximum penalty for wire fraud is 20 years in prison.
The case is being investigated by the FBI, IRS-CI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section.
The case is being prosecuted by Deputy Chief Charles La Bella, Senior Deputy Chief for Litigation Kathleen McGovern and Trial Attorneys Thomas B.W. Hall and Alison Anderson of the Criminal Division’s Fraud Section. The Department also thanks former Trial Attorneys Mary Ann McCarthy and Nicole Sprinzen for their efforts in prosecuting the case.Former Alabama KKK Leader Pleads Guilty to Cross Burning and Obstruction of JusticeRead the Press Release
Steven Joshua Dinkle, 28, former Exalted Cyclops of the Ozark, Ala., chapter of the International Keystone Knights of the Ku Klux Klan (KKK), pleaded guilty in federal court today to hate crime and obstruction of justice charges for his role in a 2009 cross burning, the Justice Department and the U.S. Attorney’s Office for the Middle District of Alabama announced.
According to documents filed with the court, Dinkle and one of his KKK recruits, Thomas Windell Smith, met at Dinkle’s home on May 8, 2009, and decided to burn a cross in a local African-American neighborhood.
Dinkle constructed a wooden cross about six feet tall, wrapped jeans and a towel around it to make it more flammable and loaded it into Smith’s truck. Around 8:00 p.m., Dinkle and Smith drove to an African-American neighborhood in Ozark. Dinkle unloaded the cross at the entrance to the community and dug a hole in the ground, then poured fuel on the cross, stood it up in the hole in view of several houses and set it on fire. Dinkle and Smith then drove away.
When questioned by local investigators, Dinkle falsely denied his involvement in the incident and stated that he had resigned his office and withdrawn from the KKK months before the cross burning. When approached by the FBI, Dinkle again lied and told a special agent that he had been at home with his girlfriend when the cross burning occurred. He further claimed that he did not know one of his superiors in the KKK at the time of the cross burning. During the plea hearing, Dinkle admitted that in burning the cross, he intended to scare and intimidate residents of the African-American community by threatening the use of force against them. He further admitted that he burned the cross because of the victims’ race and color and because they were occupying homes in that area.
Dinkle pleaded guilty to one count of conspiracy to violate housing rights, one count of criminal interference with the right to fair housing and two counts of obstruction of justice.
Dinkle faces a statutory maximum sentence of 10 years in prison and a $250,000 maximum fine on the conspiracy and criminal interference counts and a statutory maximum sentence of 25 years in prison and a $500,000 maximum fine for obstructing justice by making false statements to both local investigators and federal agents. Sentencing for Dinkle has not yet been scheduled.
Dinkle’s co-conspirator, Smith, pleaded guilty to one count of conspiracy to violate housing rights in December 2013. He is scheduled to be sentenced on March 11, 2014.
“By targeting the victims with a blazing cross in the night, one of the most threatening racial symbols in our nation’s history, the defendant attempted to terrorize a neighborhood because of the color of the residents’ skin,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “Prosecuting these racially motivated crimes will continue to be a priority for the Department of Justice.”
“ As a society we hope to never see this type of hate,” said U.S. Attorney George L. Beck Jr. for the Middle District of Alabama. “We will continue to prosecute those that commit these horrible acts of hate to the fullest extent of the law.”
This case was investigated by the FBI, with the assistance of the Dale County Sheriff’s Office and the Ozark Police Department. The case is being prosecuted by Assistant U.S. Attorney Jerusha T. Adams of the Middle District of Alabama and Trial Attorney Chiraag Bains of the Civil Rights Division.
Court Permanently Enjoins Georgia Tax Return Preparer and Her CompanyRead the Press Release
A federal district judge in the Atlanta Division for the Northern District of Georgia permanently barred Joan Leger and her company from preparing federal income tax returns for others on Jan. 31, 2014, the Justice Department announced today. The judgment also requires Leger to send copies of the permanent injunction to her customers.
Leger, who resides in Stone Mountain, Ga., is a paid tax preparer who does business through The 1804 Tax Group Inc. and Liberty Tax Service, and previously did business through J & Company. The complaint alleges that since 2009, Leger, through her companies, has prepared almost 6,000 tax returns. Leger allegedly understated her customers’ tax liabilities and overstated their refunds by creating or inflating deductions, wages, income, expenses or credits in order to maximize the earned income tax credit, as well as wrongly claimed other credits and deductions. Leger’s practices include fabricating losses for non-existent businesses or businesses not owned and operated by the taxpayer, falsely claiming unreimbursed business expenses and falsely claiming the educational tax credit. Altogether, the complaint alleges that Leger’s activities may have resulted in a loss of more than $2 million to the U.S. Treasury. Leger and The 1804 Tax Group consented to the entry of the injunction.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2013. The Internal Revenue Service has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website.
Related Materials:
United States v. Joan Leger, et al.
Complaint for Permanent Injunction
Final Judgment of Permanent Injunction Against Joan Leger and the 1804 Tax Group, Inc., d/b/a Liberty Tax ServiceAisan Industry Co. Ltd. Agrees to Plead Guilty to Price Fixing on Automobile Parts Installed in U.S. CarsRead the Press Release
WASHINGTON — Aisan Industry Co. Ltd., an Obu, Japan-based company, has agreed to plead guilty and to pay a criminal fine of $6.86 million for its role in a price-fixing conspiracy involving electronic throttle bodies sold in the United States and elsewhere, the Department of Justice announced today.
According to a one-count felony charge filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Aisan engaged in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of electronic throttle bodies sold to Nissan Motor Co. Ltd. and certain of its subsidiaries in the United States and elsewhere. In addition to the criminal fine, Aisan has also agreed to cooperate with the department’s ongoing auto parts investigations. The plea agreement is subject to court approval.
“The Antitrust Division will continue to hold companies accountable for anticompetitive conduct that impacts the automobile industry in the United States,” said Brent Snyder, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “To date, 25 companies have been charged as part of the Antitrust Division’s ongoing auto parts investigation.”According to the charges, Aisan and its co-conspirators carried out the price-fixing conspiracy through meetings and conversations in which they discussed and agreed upon bids and price quotations for electronic throttle bodies. Aisan’s involvement in the conspiracy to fix prices of electronic throttle bodies lasted from at least as early as October 2003 until at least February 2010.
Aisan manufactures and sells automotive electronic throttle bodies, which are part of the air intake system in an engine that controls the amount of air flowing into an engine’s combustion chamber. By controlling air flow within an engine, the electronic throttle body controls engine speed.
Including Aisan, 25 corporations have pleaded guilty or agreed to plead guilty in the department’s investigation into price fixing and bid rigging in the auto parts industry. The companies have agreed to pay a total of more than $1.8 billion in fines. Additionally, 28 individuals have been charged.
Aisan is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charges were brought by the San Francisco Office of the Antitrust Division with assistance provided by the National Criminal Enforcement Section of the Antitrust Division, the Detroit Field Office of the FBI, and the FBI headquarters’ International Corruption Unit. Anyone with information concerning this investigation should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the Detroit Field Office of the FBI at 313-965-2323.
Three Tennessee Men Plead Guilty in $18 Million Ponzi SchemeRead the Press Release
Top officers and a salesman for an investment company based in Nashville, Tenn., have pleaded guilty for their roles in an $18 million Ponzi scheme.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney David Rivera of the Middle District of Tennessee, Special Agent in Charge Todd McCall of the FBI’s Memphis Division and Special Agent in Charge Christopher Henry of the IRS-Criminal Investigation in Nashville made the announcement today after the pleas were accepted by U.S. District Judge Todd J. Campbell in the Middle District of Tennessee.
Terry Kretz, 61, of Gallatin, Tenn., the chief executive officer for Hanover Corporation, and Daryl Bornstein, 54, of College Grove, Tenn., a Hanover salesman, pleaded guilty today to securities fraud, money laundering, and conspiracy to commit securities fraud, wire fraud and mail fraud. On Jan. 29, 2014, Hanover’s chief financial officer, Robert Haley, 54, pleaded guilty to the same charges. Kretz and Haley also pleaded guilty to mail fraud.
“The three men who pleaded guilty today schemed, lied, and stole at the expense of innocent investors,” said Acting Assistant Attorney General Raman. “They ran a classic Ponzi scheme until the bottom fell out, and their clients – people looking to provide stability for their families or save for their retirements – suffered serious financial harm. We will stay vigilant to ensure that fraudsters like Kretz, Bornstein and Haley are held accountable.”
“Ponzi schemes typically leave unsuspecting investors in financial ruin and many have lost their life’s savings,” said U.S. Attorney Rivera. “The U.S. Attorney’s Office and our law enforcement partners will continue to place a great emphasis on educating the public about investment fraud and will vigorously pursue those who prey upon unsuspecting investors.”
“It is a priority of the FBI to target fraudsters who use criminal investment and Ponzi schemes to scam innocent working families and retirees out of their hard earned money,” said FBI SAC McCall. “These pleas demonstrate the effectiveness of state and federal law enforcement working together to protect the public from financial fraudsters and bring those responsible to justice.”
“Promoters of Ponzi schemes prey upon trusting investors and then steal their hard earned money,” said IRS-CI SAC Henry. “Investors should be wary of programs promising unbelievable returns and investments should be looked at carefully. Remember the old cliché, ‘If it seems too good to be true, it probably is’.
The three men were indicted by a federal grand jury on July 27, 2011. Sentencing is scheduled for April 2, 2014.
According to court documents, the defendants carried out the fraudulent scheme from October 2004 through August 2006. During that period, Kretz and Bornstein offered clients the opportunity to invest in Hanover through promissory notes bearing high interest rates. Through representations in the promissory notes, as well as their own discussions with investors, Kretz and Bornstein told clients that their money would be used for specific purposes, such as investing in stock options and startup companies. In fact, as all three defendants knew, more than half the money invested in Hanover went to repay earlier investors, to pay Hanover’s salaries and overhead, or to benefit the defendants personally. Such personal benefits included the purchase of a $600,000 residential building lot in the name of Kretz personally, contributing more than $176,000 to a church, and paying for golf memberships.
Kretz and Bornstein also issued Hanover promissory notes to reimburse individuals who had previously lost money investing in ventures recommended by Bornstein before he joined Hanover. In some cases, these old investors contributed new money to Hanover, while in other cases, they invested nothing. In both cases, money from new investors in Hanover was used to make payments on promissory notes issued to cover non-Hanover losses without the Hanover investors’ knowledge.
Haley, in his role as chief financial officer, furthered the fraud by sending note holders checks that purported to be for “interest” — but were in fact simply transfers of money recently taken in from new investors. Haley also prepared a false balance sheet that overstated Hanover’s financial health and that he knew would be shown to note holders.
The case was investigated by the FBI, IRS-CI, the Tennessee Bureau of Investigation, and the Tennessee Department of Commerce and Insurance. The case is being prosecuted by Assistant United States Attorney Scarlett S. Nokes of the Middle District of Tennessee and Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section.
Today’s convictions are part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorney’s Offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.govThe Executive Office for Immigration Review Announces Availability of Country Conditions Resource Information on the InternetRead the Press Release
FALLS CHURCH, Va. – The Executive Office for Immigration Review (EOIR) today announced the new Country Pages section of the Virtual Law Library, the agency’s online legal research resource. The new section is an extensive collection of information about the conditions in countries around the world. This unique educational resource, containing publicly-available documents that report on multiple aspects of country conditions, could be relevant to respondents in proceedings before the immigration courts and the Board of Immigration Appeals. The release of these pages is a new effort to provide the public with access to one website that hosts detailed information from many sources.
“EOIR is constantly evaluating its programs to improve the way we serve the public,” said EOIR Director Juan P. Osuna. “The release of country conditions information will allow the public ease of access to more specific and complete information to aid parties in preparing their cases before EOIR’s tribunals. I am so pleased to be able to offer this tremendous resource to the public.”
EOIR’s new section hosts information on 54 countries, including documents addressing areas such as political parties, human rights, religion, sexual orientation and trafficking, as well as maps, citizenship documents, and relevant laws. Information is culled from reports from multiple sources, including the U.S. Government, the United Nations, foreign governments, non-governmental organizations, and media outlets.
- EOIR -
The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR’s immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR’s Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.
Roxbury Correctional Institution Sergeant Convicted of Obstructing JusticeRead the Press Release
The Justice Department, the U.S. Attorney’s Office for the District of Maryland and the FBI announced that Josh Hummer, a sergeant at the Roxbury Correctional Institution (RCI) in Hagerstown, Md., was convicted today by a federal jury of obstructing justice during the investigation of an assault against an inmate.
Hummer faces a statutory maximum of 20 years when he is sentenced by U.S. District Judge James K. Bredar. The assault against the inmate occurred on March 9, 2008.
In related cases, Judge Bredar has accepted guilty pleas from former RCI officers Ryan Lohr, Dustin Norris, Tyson Hinckle, Reginald Martin, Michael Morgan, Edwin Stigile, Lanny Harris, Philip Mayo, Jeremy McCusker, Walter Steele, Keith Morris and Robert Harvey. Two former RCI officers previously pleaded guilty in state court.
Two current or former RCI officers still face federal charges in connection with this incident. The officers, who are presumed innocent until proven guilty, will stand trial in February.
The investigation by the Fredrick Resident Agency of the FBI is ongoing. The case is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorneys Christine Siscaretti and Sanjay Patel for the Civil Rights Division.
Queens, N.Y., Doctor Sentenced for His Role <br /> in $15 Million Medicare Fraud SchemeRead the Press Release
A Queens, N.Y., medical doctor was sentenced today to serve 12 months and a day in prison for his role in a scheme that fraudulently billed Medicare more than $15 million for, among other things, physical therapy and lesion removal services that were medically unnecessary and never provided.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director in Charge George Venizelos of the FBI’s New York Field Office, and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.
Hoi Yat Kam, 59, was sentenced by U.S. District Judge Edward R. Korman in the Eastern District of New York. In addition to his prison term, Kam was sentenced to serve three years of supervised release and to pay $2,217,656 in restitution.
Kam pleaded guilty on Jan. 9, 2013, to conspiracy to commit health care fraud. According to court documents, Kam conspired with others to execute a fraudulent scheme in which he and others provided a variety of spa services, such as massages and facials, as well as free meals and social activities to Medicare beneficiaries at URI Medical Service PC and Sarang Medical PC to induce those beneficiaries to allow their Medicare numbers to be billed for medical services that were never provided and were not medically necessary. URI and Sarang were two clinics in Queens that purportedly provided physical therapy and lesion removals. In total, Kam and his co-conspirators submitted approximately $15.1 million in false and fraudulent claims to Medicare.
The case was investigated by HHS-OIG and the FBI and brought as part of the Medicare Fraud Strike Force, under the supervision by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. The case was prosecuted by Senior Trial Attorney Nicholas Acker and Trial Attorney Bryan D. Fields of the Fraud Section. Trial Attorney Katherine Houston formerly prosecuted the case.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .Leader of Alleged Sports Betting Ring<br /> Pleads Guilty to Racketeering ChargesRead the Press Release
Joseph Vito Mastronardo Jr., 63, of Meadowbrook, Pa., pleaded guilty today to conspiring to participate in a racketeering enterprise (RICO), conducting an illegal gambling business, four counts of conspiring to launder money, eight counts of interstate travel in aid of racketeering, transmitting wagering information and aggravated structuring of cash deposits.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Zane D. Memeger of the Eastern District of Pennsylvania made the announcement.
The guilty plea stems from Mastronardo’s leadership of the Mastronardo Bookmaking Organization, a multi-million dollar sports betting operation with bettors throughout the U.S. No sentencing date has been scheduled.
Mastronardo is one of 19 defendants charged in the case. Three defendants were charged by information and 16 defendants were charged by indictment. In the indictment, 15 of the 16 defendants were charged with conspiring to participate in a racketeering enterprise and conducting an illegal gambling business. With today’s guilty plea, 11 of the 16 defendants charged in the indictment have pleaded guilty.
At its peak, the organization had more than 1,000 bettors and was generating millions of dollars a year. According to the indictment, between Jan. 1, 2005, and Jan. 1, 2011, the organization used websites ( www.betroma.com and www.betrose.com ) and telephone numbers that allowed bettors to place sports bets on football, baseball, basketball, golf, horse racing and other sporting events. Residents of Costa Rica staffed the websites and answered the telephones. In 2006 and 2010, law enforcement seized over $2 million of cash that Mastronardo had hidden in and around his home, including in specially built secret compartments and in PVC pipes that were buried in his backyard.
Mastronardo ran the organization by using the Internet, telephone, Skype, e-mail, U.S. mail, and in-person communication. The Mastronardo Bookmaking Organization laundered the gambling proceeds by using a check cashing agency, two private bank accounts and numerous international bank accounts. On occasion, Mastronardo also provided instructions so a losing bettor could pay a gambling debt through a charitable donation.
Mastronardo supervised the agents, sub-agents and office employees and oversaw the websites. He laundered millions of dollars of betting proceeds, collected debts, and instructed others to collect debts. Other indicted defendants who have pleaded guilty include: Mastronardo’s son, Joseph F. Mastronardo, who worked as an office employee, collected debts and performed other financial duties; Eric Woehlcke, who worked as an office employee, collected debts and served as a sub-agent; Joseph and Anna Rose Vitelli, who owned J & A Check Cashing, which laundered the gambling proceeds; and Patrick Tronoski, Schuyler Twaddle, Michael Loftus, Michael Squillante, David Rounick and Ronald Gendrachi.
The case was investigated by the FBI, the Internal Revenue Service Criminal Investigation, the Montgomery County Detective Bureau, and the Montgomery County District Attorney’s Office. It is being prosecuted by Assistant United States Attorney Jason P. Bologna of the Eastern District of Pennsylvania and Trial Attorney Kelly Pearson of the Criminal Division’s Organized Crime and Gang Section.Former President and Vice President of Diamond Electric Agree to Plead <br /> Guilty to Participating in Auto Parts Price-fixing ConspiracyRead the Press Release
The former president and vice president of Osaka, Japan-based Diamond Electric Mfg. Co. Ltd. have agreed to plead guilty for their participation in a global conspiracy to fix prices of ignition coils installed in cars sold in the United States and elsewhere, the Department of Justice announced today. Ignition coils are part of a car’s fuel ignition system and release electric energy suddenly to ignite a fuel mixture.
Separate felony charges were filed today in U.S. District Court for the Eastern District of Michigan in Detroit against Shigehiko Ikenaga and Tatsuo Ikenaga. According to court documents, from at least as early as July 2003 until at least February 2010, the former executives participated in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of ignition coils sold to automotive manufacturers for installation in vehicles manufactured in the United States and elsewhere. The automotive manufacturers included Ford Motor Co., Toyota Motor Corp. and Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and certain of their subsidiaries.
Shigehiko Ikenaga, president of Diamond Electric during the relevant period, agreed to serve 16 months in a U.S. prison. Tatsuo Ikenaga, Diamond Electric’s managing director, and then vice president beginning in 2008, agreed to serve 13 months in a U.S. prison. Tatsuo Ikenaga also simultaneously served as president of Diamond Electric’s U.S. subsidiary during the relevant period. Additionally, the former executives have each agreed to pay a $5,000 criminal fine and to cooperate with the department’s ongoing investigation. Each of the Ikenaga’s plea agreements is subject to court approval. On Sept. 10, 2013, Diamond Electric pleaded guilty for its involvement in the conspiracy and was fined $19 million.
“The two former executives charged today once again demonstrate the Antitrust Division’s vigorous commitment to hold individuals accountable for engaging in anticompetitive conduct,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “The division’s ongoing investigation has resulted in more than two dozen executives serving prison time for their participation in illegal, auto parts conspiracies.”Diamond Electric is a manufacturer of ignition coils and was engaged in the sale of ignition coils in the United States and elsewhere. According to the charges, the Diamond Electric executives and their co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and communications to coordinate bids submitted to automobile manufacturers.
Each executive is charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Including today’s charges, 28 individuals and 24 companies have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry.
Today’s charges arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s pleas are the result of the National Criminal Enforcement Section with the assistance of the Detroit Field Office of the FBI. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html , or call the Detroit Field Office of the FBI at 313-965-2323.
Two Sentenced for Involvement in <br /> Aryan Brotherhood of Texas Racketeering MurderRead the Press Release
An Aryan Brotherhood of Texas (ABT) gang member and an ABT associate were sentenced to prison today for their involvement in the May 2008 murder of an ABT prospect member.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas made the announcement after sentencing by U.S. District Judge Sim Lake in the Southern District of Texas.
Shane Gail McNiel, aka “Dirty,” 34, of San Antonio, was sentenced to serve 120 months in prison and Destiny Nicole Feathers, 24, of Jourdanton, Texas, was sentenced to serve 78 months in prison. In addition to their prison terms, McNiel and Feathers were sentenced to serve three years of supervised release.
On Aug. 21, 2013, McNiel pleaded guilty to the charge of accessory after the fact in the murder. Feathers pleaded guilty to the same offense on Aug. 14, 2013.
According to information presented in court, McNiel was a member of the ABT and Feathers was associated with the gang, a powerful, race-based, statewide organization that operates inside and outside of state and federal prisons throughout Texas and the United States. According to court documents, an ABT prospective member was murdered by Jim Flint McIntyre, 43, aka “Q-Ball,” Michael Dewayne Smith, 30, aka “Bucky,” and another ABT gang member for allegedly stealing drugs he was ordered to deliver to a customer on behalf of the ABT. According to court documents, the murder was a result of a “discipline” ordered by Frank Lavell Urbish, aka “Thumper,” and his superiors. The victim’s body was discovered in Atascosa County, Texas, on May 4, 2008. McIntyre, Smith, and Urbish each pleaded guilty to this racketeering murder in 2011.
According to the superseding indictment, the ABT was established in the early 1980s within the Texas prison system. The gang modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s. According to the superseding indictment, previously, the ABT was primarily concerned with the protection of white inmates and white supremacy. Over time, the ABT has expanded its criminal enterprise to include illegal activities for profit.
Court documents allege that the ABT enforced its rules and promoted discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, arson, assault, robbery and threats against those who violate the rules or pose a threat to the enterprise. Members, and oftentimes associates, were required to follow the orders of higher-ranking members, often referred to as “direct orders.”
According to the superseding indictment, to be considered for ABT membership, a person must be sponsored by another gang member. Once sponsored, a prospective member must serve an unspecified term, during which time he is referred to as a prospect, while his conduct is observed by the members of the ABT.
McNiel and Feathers are two of 36 defendants charged with conducting racketeering activity through the ABT criminal enterprise, among other charges.
This case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; FBI; U.S. Marshals Service; Federal Bureau of Prisons; U.S. Immigration and Customs Enforcement Homeland Security Investigations; Texas Rangers; Texas Department of Public Safety; Montgomery County, Texas, Sheriff’s Office; Houston Police Department-Gang Division; Texas Department of Criminal Justice – Office of Inspector General; Harris County, Texas, Sheriff’s Office; Tarrant County, Texas, Sheriff’s Office; Atascosa County, Texas, Sheriff’s Office; Orange County, Texas, Sheriff’s Office; Waller County, Texas, Sheriff’s Office; Alvin, Texas, Police Department; Carrollton, Texas, Police Department; Mesquite Texas, Police Department; Montgomery County District Attorney’s Office; and the Atascosa County District Attorney’s Office.
The case is being prosecuted by the Criminal Division’s Organized Crime and Gang Section and the U.S. Attorney’s Office for the Southern District of Texas.Three Miami Residents Indicted for Alleged Roles <br /> in $190 Million Medicare Fraud SchemeRead the Press Release
Three Miami residents have been indicted for their alleged participation in a $190 million Medicare fraud scheme.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent in Charge Michael B. Steinbach of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement after the indictment was unsealed.
On Jan. 28, 2014, a federal grand jury in Miami returned a 10-count indictment charging Nelson Rojas, 43, Roger Bergman, 64, and Rodolfo Santaya, 54, for allegedly participating in a scheme to defraud Medicare by submitting false and fraudulent claims, from approximately December 2002 to October 2010.
Rojas was charged with conspiracy to pay and receive bribes and kickbacks in connection with a federal health care program, conspiracy to commit money laundering, two counts of money laundering and one count of aggravated identity theft. Bergman and Santaya were each charged with conspiracy to commit health care fraud and wire fraud. In addition, Bergman was charged with conspiracy to make false statements relating to health care matters. Santaya was also charged with conspiracy to pay and receive bribes and kickbacks in connection with a federal health care program, as well as two counts of receiving bribes and kickbacks in connection with a federal health care benefit program.
According to the indictment, Rojas, Bergman and Santaya allegedly participated in a scheme orchestrated by the owners and operators of American Therapeutic Corporation (ATC) and its management company, Medlink Professional Management Group Inc. ATC and Medlink were Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs), a form of intensive treatment for severe mental illness, in seven different locations throughout South Florida. Both corporations have been defunct since October 2010.
The indictment alleges that Bergman was a licensed physician’s assistant who participated in the scheme by, among other things, admitting Medicare beneficiaries to ATC facilities for PHP treatment even though they did not quality for such treatment and falsifying patient records to make it appear as though patients needed, qualified for and actually received legitimate PHP treatment when they did not. The indictment alleges that Santaya served as a patient recruiter who provided ineligible patients to ATC in exchange for kickbacks. The indictment alleges that Rojas was the co-owner of a check cashing business and that he facilitated the payments of bribes and kickbacks from ATC to various patient recruiters.
ATC, Medlink and various owners, managers, doctors, therapists, patient brokers and marketers of ATC and Medlink have pleaded guilty or have been convicted at trial. In September 2011, ATC owner Lawrence Duran was sentenced to 50 years in prison for his role in orchestrating and executing the scheme to defraud Medicare.
The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. The case is being prosecuted by Assistant Chief Robert A. Zink and Trial Attorney Nicholas E. Surmacz.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,700 defendants who collectively have falsely billed the Medicare program for more than $5.5 billion. In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .Statement by Attorney General Eric Holder <br /> Regarding the Case of Dzhokhar TsarnaevRead the Press Release
Attorney General Eric Holder today released the following statement regarding the case of Dzhokhar Tsarnaev:
“After consideration of the relevant facts, the applicable regulations and the submissions made by the defendant’s counsel, I have determined that the United States will seek the death penalty in this matter. The nature of the conduct at issue and the resultant harm compel this decision.”
Justice Department Reaches Settlement to Resolve Claim of Citizenship Status Hiring Discrimination in Waterloo, IowaRead the Press Release
The Justice Department announced today that it has reached an agreement with the city of Waterloo, Iowa, resolving allegations that the city violated the anti-discrimination provision of the Immigration and Nationality Act (INA).
The department initiated its investigation after a charge was filed by a work-authorized, lawful permanent resident alleging that the city refused to consider him for a fire fighter position because he was not a U.S. citizen. The department’s investigation confirmed that the city of Waterloo improperly restricted fire fighter positions to U.S. citizens despite the fact that no law, regulation, executive order or government contract authorized the city to legally restrict employment in such a manner under the INA. The investigation further revealed that the city of Waterloo had refused to consider the charging party’s application on the basis of his citizenship status.
Under the settlement agreement, the city of Waterloo must provide the charging party with another opportunity to apply for the position and must hire or otherwise compensate the charging party if the charging party’s performance on the city’s hiring tests confirm that he would have been hired in the absence of discrimination. In addition, the city of Waterloo will pay $13,000 in civil penalties to the United States, and has agreed to make changes to its policies and practices to ensure unlawful citizenship requirements are not imposed, to provide training to city officials, and to be subject to monitoring by the department for one year.
“Employers must make sure that they are not erecting unlawful, discriminatory barriers in hiring,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The department is committed to knocking down these barriers through its enforcement of the INA and making sure that work-authorized applicants have equal employment opportunities.”
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. For more information about protections against employment discrimination under the immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TTY for hearing impaired), call OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TTY for hearing impaired), sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc
Jury Convicts Two Men for Filing False Claims Against Internal Revenue ServiceRead the Press Release
Jason McGuire of Detroit, Mich., and Delvin Davis of Saint Clair Shores, Mich., were found guilty by a jury sitting in Detroit in the Eastern District of Michigan of conspiracy and filing $3.4 million in false claims in the form of false individual income tax returns and false trust tax returns, the Justice Department and Internal Revenue Service (IRS) announced today. The defendants were also found guilty of filing or aiding and abetting in the filing of false, fictitious and fraudulent claims; Davis was found guilty of five such counts and McGuire of 18 counts. Witness testimony revealed that the defendants attended the same high school in Detroit and began the scheme in 2008. Prior to that time, McGuire had worked as a mechanic and Davis had worked as a mortgage broker and operated a “credit repair” business.
According to court documents and evidence introduced at trial, McGuire, 37, and Davis, 36, recruited individuals from the Detroit area with whom they had existing, long-standing business and personal relationships to sign fraudulent trust and income tax returns. McGuire had the taxpayers sign blank trust return forms, and the taxpayers never saw the filled-out forms before they were filed. McGuire attached bogus forms to the income tax returns. McGuire included fictitious withholdings in both types of return forms, resulting in the taxpayers receiving large refunds. The defendants recruited at least nine different taxpayers to participate in the fraudulent scheme. The IRS received returns requesting more than $3.4 million in false refunds and paid over $1.5 million in false refunds as a result of the fraudulent scheme. Several taxpayers testified at trial that they were required to pay fines and interest to the IRS as a result of the false tax returns that the defendants submitted to the IRS.
“Those who prepare and file fraudulent returns cheat all honest taxpayers,” said Assistant Attorney General Kathryn Keneally for the Tax Division. “The Department is committed to investigating, stopping, and prosecuting these crimes.”
"When criminals cheat the IRS, they rob all of us as taxpayers,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan. “We hope that prosecutions like this one will deter others from stealing taxpayer funds."
Sentencing is scheduled for May 2, 2014, before U.S. District Judge Stephen J. Murphy. McGuire and Davis each face a statutory maximum potential sentence of 10 years in prison and a $250,000 fine for the conspiracy count and five years in prison and a $250,000 fine for each count of filing a false claim.
This case was investigated by IRS-Criminal Investigation and was prosecuted by Assistant U.S. Attorney Elizabeth Stafford and Trial Attorney Mark McDonald of the Tax Division.
Federal Agencies Partner to Protect Veterans, Service Members and Their Families Using Gi Bill Education BenefitsRead the Press Release
The Departments of Veterans Affairs, Defense, Education and Justice, along with the Consumer Financial Protection Bureau and the Federal Trade Commission announced today the launch of a new online complaint system designed to collect feedback from veterans, service members and their families who are experiencing problems with educational institutions receiving funding from Federal military and veterans educational benefits programs, including benefits programs provided by the Post-9/11 GI Bill and the DoD Military Tuition Assistance Program.
The centralized online reporting system is designed for veterans, service members and eligible dependents to report negative experiences with educational institutions; and gives the federal government the information needed to identify and address unfair, deceptive, and misleading practices and ensure high quality academic and student support services are available for veterans, service members, and their families.
“The online complaint system empowers veterans and their dependents and provides them a direct line to VA and our partner agencies,” said Allison A. Hickey, Under Secretary for Benefits, Department of Veterans Affairs. “The feedback we receive from veterans, service members and their families will help us strengthen enforcement of the ‘Principles of Excellence’ for institutions of higher learning serving veterans and their families to ensure students are receiving the education benefits they have earned and deserve.”
"Our service members and their families now have an easier and efficient way to provide feedback on their civilian educational experiences, which will ensure we have the right information to identify and address any negative practices," said Jessica Wright, Acting Under Secretary of Defense for Personnel and Readiness.
“This launch marks a critical step in an ongoing interagency effort to stop those who engage in fraud and misrepresentation targeting our service members and veterans,” said Stuart F. Delery, Assistant Attorney General for the Civil Division of the Department of Justice. “Individuals who report concerns will not only be able to resolve their personal issue, but also help protect fellow service members and veterans from the same misconduct.”
Students can submit a complaint if they believe their school is failing to follow the Principles of Excellence, (i.e. unfair recruiting practices, credit transfer or change in degree requirements) through the centralized online reporting system accessed via the Department of Defense and GI Bill websites. When feedback is received, agencies will contact the school on behalf of the student and work toward a resolution. Complaints and their resolution will be forwarded to the Federal Trade Commission Consumer Sentinel Network, accessible by over 650 federal, state and local law enforcement agencies for use in enhancing and coordinating law enforcement investigations.
Executive Order 13607, signed April 27, 2012, addresses reports of unfair, deceptive or misleading behavior toward veterans, service members and their families pursuing higher education and directs agencies to establish, implement and promote compliance with “Principles of Excellence” for educational institutions receiving funding from Federal military and veterans educational benefits programs for America’s veterans, service members and eligible dependents, including preventing abusive and deceptive recruiting practices. The new online complaint system is one of a range of tools being implemented by the federal government to ensure that service members, veterans and eligible dependents have access to meaningful information about the cost and quality of educational institutions.
Department of Justice Publishes Notice of Proposed Rulemaking to Implement ADA Amendments Act of 2008Read the Press Release
The Department of Justice published a Notice of Proposed Rulemaking today intended to revise the department’s Americans with Disabilities Act (ADA) Title II and Title III regulations to implement the requirements of the ADA Amendments Act of 2008 (ADAAA). Congress passed the ADAAA in response to several Supreme Court decisions that had narrowly interpreted the ADA’s definition of disability. The ADAAA made a number of significant changes to the ADA definition of disability to ensure that it would be easier for individuals seeking the protection of the ADA to establish that they have a disability that falls within the meaning of the statute.
“The narrow interpretation of the ADA’s definition of disability resulted in the denial of the law’s protection for many individuals with impairments such as cancer, diabetes and epilepsy who had been the subject of adverse actions due to their disabilities,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The ADAAA and our proposed regulations properly place the focus of ADA cases on whether a covered entity has complied with its obligations and whether discrimination occurred, and not on whether the person has a disability.”
The ADAAA’s revised definition of disability applies to Title I, which deals with employment, as well as to Titles II and III of the ADA. The Equal Employment Opportunity Commission, which is responsible for developing regulations that implement Title I of the ADA, published its revised Title I regulation incorporating the ADAAA in March 2011. The department has made every effort to ensure that its proposed revisions to the Title II and Title III regulations are consistent with, if not identical to, the corresponding provisions in the Title I regulation. This will ensure that the definition of disability is interpreted consistently for all three titles of the ADA.
The comment period for the proposed rule closes on March 31, 2014. For more information about the ADAAA and to comment on the proposed rule, please visit www.federalregister.gov/articles/2014/01/30/2014-01668/office-of-the-attorney-general-amendment-of-americans-with-disabilities-act.
Tropical Fish Importer Pleads Guilty in New York Federal Court to Piranha Import ViolationsRead the Press Release
Joel Rakower, along with his solely-owned corporation, Transship Discounts Ltd., pleaded guilty today in federal court in Brooklyn, N.Y., to violating the Lacey Act by mislabeling imported piranhas, announced Acting Assistant Attorney General Robert G. Dreher for the Environment and Natural Resources Division of the Department of Justice and Queens County District Attorney Richard A. Brown.
In the plea agreement, Rakower admitted that his company purchased piranhas from a Hong Kong tropical fish supplier and imported them to Queens, N.Y. Each such import must be accompanied by a packing list describing what wildlife is contained in the package being imported, and the importer must provide this packing list to the United States Fish and Wildlife Service upon import for inspection. In March of 2011, shortly after New York City prohibited possession of piranhas, Rakower instructed the foreign supplier to falsely label the piranhas on packing lists as silver tetras, a common and unaggressive aquarium fish. Over the course of 2011 and 2012, Transship submitted packing lists to the Fish and Wildlife Service containing false identifications of 39,548 piranhas, worth approximately $37,376, which Transship then sold to fish retailers in several states.
“Rakower flouted federal laws meant to protect people and the environment from the illegal trade in wildlife species,” said Acting Assistant Attorney General Dreher. “Mislabeling imported wildlife presents dangers to the public and the environment and we will continue to prosecute these cases.”
Under the plea agreements, Rakower agreed to pay a $3,000 fine. Transship agreed to serve a two-year period of probation, pay a $35,000 fine and pay $35,000 in restitution to the State of New York’s Department of Environmental Conservation Division of Law Enforcement. Both parties will be sentenced on April 24, 2014.
Piranhas are freshwater fish originating from South American rivers such as the Amazon, Orinoco, Guyana and the Sao Francisco river systems. Piranhas are extremely aggressive and territorial, feeding on insects, fish, and larger prey such as amphibians, reptiles and mammals. As a result of piranhas’ aggressiveness, 25 states have either banned or regulated piranhas, making them illegal to own or sell. Piranhas, an injurious species, could pose a serious risk if they escaped into native water systems, potentially damaging ecosystems through aggressive predation or injuring people or pets. Tropical fish enthusiasts can contribute to this possibility by releasing piranhas into the wild when they grow too large for a tank. Although piranhas originate from tropical waters, they are able to withstand much cooler water temperatures, creating fear that they may even become established in more northern US waters. Effective regulation of piranha possession and sales within the United States depends on accurate reporting of piranha imports; concealing the fish upon import facilitates their entry into the black market in states that have banned or strictly regulated piranhas to protect state waters and ecosystems.
“Driven by greed and without regard for the health and safety of people or the environment, the defendant and his company illegally trafficked in piranha by falsely labeling the imported predatory freshwater fish as being silver tetras, a far more benign fish often kept in home aquariums and having a far less street value than piranha,” said District Attorney Brown. “I thank the New York State Department of Environmental Conservation and our federal colleagues – the U.S. Fish and Wildlife Service and the United States Department of Justice’s Environment and Natural Resources Division – for providing a reasonable and appropriate resolution of the case.”
This case was investigated by the United States Fish and Wildlife Service in conjunction with the New York State Department of Environmental Conservation Division of Law Enforcement, and is being prosecuted by Cassandra Barnum, a trial attorney in the Environmental Crimes Section of the U.S. Department of Justice’s Environment and Natural Resources Division.Kentucky Hospital Agrees to Pay Government $16.5 Million to Settle Allegations of Unnecessary Cardiac ProceduresRead the Press Release
Saint Joseph Health System Inc. has agreed to pay $16.5 million to resolve allegations that Saint Joseph Hospital violated the False Claims Act by submitting false claims to the Medicare and Kentucky Medicaid programs for a variety of medically unnecessary cardiac procedures, the Justice Department announced today. Saint Joseph Health System operates numerous hospitals statewide, including Saint Joseph Hospital, which is based in London, Ky.
“Hospitals that place their financial interests above the well-being of their patients will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “ The Department of Justice will not tolerate those who abuse federal health care programs and put the beneficiaries of these programs at risk.”
The government alleged that doctors working at Saint Joseph Hospital performed numerous invasive cardiac procedures, including coronary stents, pacemakers, coronary artery bypass graft surgeries and diagnostic catheterizations, on Medicare and Medicaid patients who did not need them, and that the hospital was aware of these unnecessary procedures. These doctors were affiliated with Cumberland Clinic which is a physician group that entered an exclusive arrangement with Saint Joseph Hospital in 2008 to provide cardiology services to the hospital’s patients. Cumberland Clinic is owned by two London-based cardiologists, Satyabrata Chatterjee and Ashwini Anand.
The settlement also resolves allegations that Saint Joseph Hospital violated the federal Stark Law and Anti-Kickback Statute by entering into sham management agreements that financially benefitted Chatterjee and Anand as an inducement for Chatterjee and Anand to direct more Cumberland Clinic patients to the hospital.
Dr. Sandesh Patil, one of the Cumberland Clinic cardiologists working at the hospital, performed many of the medically unnecessary coronary stents. Patil has since pleaded guilty to a federal health care fraud offense and has been sentenced to serve 30 months in prison.
“We all rely on health care providers to make treatment decisions based on clinical, not financial, considerations,” said U.S. Attorney for the Eastern District of Kentucky Kerry Harvey. “The conduct alleged in this case violates that fundamental trust and squanders scarce public resources set aside for legitimate health care needs. We will use every available tool to protect our federal health care programs and the patients who they serve.”
In connection with this settlement, Saint Joseph Hospital has agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG), which obligates the hospital to undertake substantial internal compliance reforms and to commit to a third-party review of its claims to federal health care programs for the next five years.
"Cases such as this threaten both the health of patients and the financial integrity of the Medicare and Medicaid programs," said Special Agent in Charge at the U.S. Department of Health and Human Services Office of Inspector General in Atlanta Derrick L. Jackson. "This settlement is another example of the OIG’s commitment to protecting our beneficiaries and to recovering any money that has been improperly paid as a result of medically unnecessary procedures."
In addition to the settlement with Saint Joseph Health System, the government announced its intervention in a lawsuit alleging False Claims Act violations by Chatterjee and Anand, who referred patients for and performed the unnecessary procedures and tests, and their practice group, Cumberland Clinic, as well the practice groups each of them owned before forming Cumberland Clinic.
The government actions announced today stem in large part from a whistleblower complaint filed by three Lexington, Ky., cardiologists pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds of the suit. The Act also permits the government to intervene in the lawsuit and take over the allegations as it has done in this case. Drs. Michael Jones, Paula Hollingsworth and Michael Rukavina will receive a total of $2.46 million of the $16.5 million settlement with Saint Joseph Hospital.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $17.1 billion through False Claims Act cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.
The investigation was conducted by the FBI, HHS-OIG, the Kentucky Office of Attorney General, Medicaid Fraud and Abuse Control Unit, the Commercial Litigation Branch of the Department of Justice Civil Division and the U.S. Attorney’s Office for the Eastern District of Kentucky. The claims settled by this agreement are allegations only, and there has been no determination of liability.
The lawsuit is captioned United States ex rel. Jones, Hollingsworth and Rukavina v. Saint Joseph Health System et al., no. 11-cv-81-GFVT (E.D.Ky.)
Justice Department Sues to Stop Florida Tax Return Preparer from Preparing Federal Tax Returns for OthersRead the Press Release
The United States has asked a federal court in Fort Lauderdale, Fla., to per manently bar Keisha Stewart and her co mpany, Professional Tax Services Inc., from preparing federal tax returns for others, the Justice Depart ment announced today.
According to the co mplaint, Stewart and her co mpany prepared federal inco me tax returns that in f lated inco me or included f ictitious inco me to quali fy her custo mers to receive or maximize the earned inco me tax credit. The co mplaint states that Stewart also clai med tax credits that are refundable or decrease the a mount of tax on her custo mers’ returns, including false education credits (A merican Opportunity Credit) and residential energy credits. According to the co mplaint, Stewart also falsely clai med head of household status on behalf of custo mers who did not qualify in order to i mproperly decrease her custo mers’ reported tax liabilities. The co mplaint also alleges that Stewart clai med false dependents on behalf of custo mers and also clai med the child and additional child tax credits on behalf of those custo mers. Allegedly, Stewart typically included these ite ms on her custo mers’ returns without their knowledge. The govern ment alleges that Stewart’s returns have resulted in over $1.6 million of loss annually to the United States during the tax years 2010, 2011 and 2012.
Return preparer fraud is one of the IRS' Dirty Dozen Tax Scams for 2013, which can be viewed at www.irs.gov/uac/Newsroom/IRS-Releases-the-Dirty-Dozen-Tax-Scams-for-2013. The IRS has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional. In the past decade, the Justice Department's Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website at www.justice.gov/tax/taxpress2013.htm.
Related Materiala:
United States v. Keisha Stewart, et al.
Complaint for Injunctive ReliefDepartment of Defense Procurement Official Sentenced for His Role in Contract Bribery SchemeRead the Press Release
A Utah man was sentenced to serve 24 months in prison for his role in a bribery and fraud scheme involving federal procurement contracts, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David B. Barlow of the District of Utah.
On Oct. 24, 2011, Jose Mendez, 50, of Farr West, Utah, pleaded guilty to conspiracy to commit bribery and procurement fraud, bribery, and procurement fraud. Mendez was charged in an October 2011 indictment, along with Sylvester Zugrav, 71, and Maria Zugrav, 67, owners of Atlas International Trading Company in Sarasota, Fla. The Zugravs were sentenced on Jan. 8, 2014.
According to court documents, while Mendez worked as a procurement program manager for the U.S. Air Force at Hill Air Force Base in Ogden, Utah, he conspired to enrich himself and others by exchanging money and other things of value for non-public information and favorable treatment in the procurement process. Court records state that Mendez was offered approximately $1,240,500 in payments and other things of value throughout the course of the conspiracy. Mendez admitted that from approximately 2008 to August 2011, he received more than $185,000 in payments and other things of value, with promises of additional bribe payments if Atlas were to receive future contracts from the U.S. government.
In return for the bribes offered and paid, Mendez admitted he gave Atlas and the Zugravs favorable treatment during the procurement process, including disclosing government budget and competitor bid information, which helped Atlas and the Zugravs in winning contracts.
The case was investigated by the FBI and the Air Force Office of Special Investigations. The case was prosecuted by Trial Attorneys Marquest J. Meeks and Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Carlos A. Esqueda of the District of Utah.
Convicted Sex Trafficker Sentenced to More Than 30 Years in PrisonRead the Press Release
U.S. District Court Judge Susan C. Bucklew sentenced Andrew Blane Fields, 62, of Lutz, Fla., to serve 33 years and nine months in prison followed by five years of supervised release, the Justice Department announced today. A jury convicted Fields on Nov. 6, 2013, of five counts of sex trafficking by force, fraud and coercion, and three narcotics counts arising from his distribution of controlled substances to the sex trafficking victims as part of his scheme of coercion.
“The Civil Rights Division is committed to pursuing justice on behalf of vulnerable members of our society,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “This defendant preyed on young women living in the shadows and on the margins. Using false promises to lure them in, he cruelly exploited them for his own profit, destroying them with drugs and selling their bodies for sex. This sentence sends a clear message that the United States will not tolerate modern-day slavery and will work tirelessly to restore the rights and dignity of its victims.”
“The court’s sentence clearly reflects the seriousness of these awful sex trafficking crimes,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida. “We will continue to work with the Clearwater Area Human Trafficking Task Force and other law enforcement partners throughout the District to prosecute sex traffickers and vindicate victims’ rights.”
During the trial, five victims recounted their intense fear of withdrawal sickness and related that Fields manipulated that fear to coerce them to perform acts of prostitution for the defendant’s profit in exchange for another dose of the addictive drugs. One of the victims testified that Fields, while watching her suffer through the onset of the excruciating physical and psychological withdrawal symptoms, would compel her to serve another prostitution client by saying, “I’ll give you one pill. I’m not going to give you another until you get up and go to work. And you know you need another.”
The case was investigated jointly by Immigration and Customs Enforcement (ICE) and the Clearwater, Fla., Police Department through their participation on the Clearwater Area Human Trafficking Task Force.
“Andrew Fields used prescription pills to manipulate and coerce his victims to prostitute themselves for his own financial gain,” said Deputy Special Agent in Charge Shane Folden of Homeland Security Investigations Tampa. “Even though we can’t take away the physical and psychological damage his victims have endured, this nearly 34-year sentence ensures that additional women won’t fall prey to his sex trafficking scheme.”
“Our agency takes these human trafficking cases very seriously because these perpetrators commit unfathomable crimes,” said Chief Anthony Holloway for the Clearwater Police Department. “This defendant took over the lives of these women. We cannot – and will not – let that happen.”
Evidence presented at trial showed that Fields identified vulnerable young women, one just 18 years old, who were prostituting or working as exotic dancers, using online advertisements to lure them with promises of safe transportation and protection. The defendant then provided the victims with addictive drugs such as Oxycodone, Dilaudid and Morphine, at levels designed to intensify their dependency and addiction. The evidence showed that the defendant rapidly increased the victims’ drug use; while some victims initially used drugs only occasionally and others used a few pills a day, Fields escalated their drug use to full-blown addiction, with some victims requiring up to 15 pills a day to stave off withdrawal symptoms. The evidence showed that Fields acquired the drugs at low costs and charged the victims inflated prices to saddle them with mounting drug debts. He then manipulated their fear of withdrawal symptoms to compel them to prostitute and turn over all proceeds to him, leaving them with no money, no other access to the addictive drugs and fully dependent on Fields to avert withdrawal sickness. At times, Fields demanded that the victims engage in sexual acts with him to pay down the debts.
Evidence seized from Fields’ home included over 4,000 prescription pills, notebooks in which he recorded the victims’ debts, advertisements for prostitution, cash, condoms and books about pimping and prescription drugs.
Surveillance camera video footage admitted into evidence showed Fields entering a hospital room in the middle of the night to deliver drugs to one of the victims. The video showed Fields handing the woman pills and another object which she hid under her bed sheet. At trial, the victim testified that the pills were Dilaudid and the other object was a syringe to inject the drug intravenously.
Another victim testified that Fields threatened to contact her probation officer and to have her probation violated if she did not continue to engage in prostitution for his profit. The evidence established that Fields caused her probation to be violated when she did not submit to his demands that she continue prostituting. The defendant contacted the victim while she was incarcerated to pressure her to recruit other victims, then immediately delivered addictive drugs to her upon her release from prison.
The case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Clearwater Police Department, with assistance from members of the Clearwater Area Human Trafficking Task Force. Assistant U.S. Attorney Josephine W. Thomas and Trial Attorney William E. Nolan of the Civil Rights Division’s Human Trafficking Prosecution Unit prosecuted the case.
Three Armed Robbers Sentenced in Federal CourtRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for Guam, announced that DWAYNE J. SAN NICOLAS, BALBINO K. LEON GUERRERO and DEDRICK J. AGUON, were sentenced today by Chief Judge Frances Tydingco-Gatewood in the District Court of Guam.
DWAYNE J. SAN NICOLAS was sentenced to serve 138 months incarceration. DEDRICK J. AGUON was sentenced to serve 117 months incarceration. BALBINO K. LEON GUERRERO was sentenced to serve 91 months incarceration. Each defendant was placed on a five-year term of supervised release, was ordered to perform community service, and ordered to pay $856.49 in restitution to New Nana’s Market.
All three defendants pleaded guilty on July 2012 to Hobbs Act Robbery in violation of Title 18 U.S.C. § 1951(a), and to the Discharging or Brandishing of a Firearm During a Crime of Violence, in violation of 18 U.S.C. § 924(c)(1)(a).
The defendants admitted to the following facts. On September 8, 2011, AGUON provided LEON GUERRERO and SAN NICOLAS with a .22 caliber firearm and a .9 mm Beretta. AGUON then drove SAN NICOLAS and LEON GUERRERO to New Nana’s Mart in Agana Heights. LEON GUERRERO and SAN NICOLAS entered New Nana’s Mart and pointed the firearms directly at the cashier and demanded money. SAN NICOLAS chambered a round and fired off a shot shattering a glass door on a cooler. The cashier handed over approximately $700 in cash to LEON GUERRERO and SAN NICOLAS. The men then fled New Nana’s Mart, stopping only to grab a 12-pack of beer. AGUON acted as the getaway driver. The robbery was captured on video surveillance.
U.S. Attorney Limtiaco states, “The use of firearms to commit violent crimes place innocent civilians and the community at great risk of harm. People who use firearms to commit crimes of violence will face aggressive prosecution and will receive hard time.”
U.S. Attorney Limtiaco noted that this prosecution is part of the U.S. Department of Justice’s Project Safe Neighborhood (PSN) Initiative, a nationwide commitment to aggressively prosecute defendants who engage in violent crime, drug distribution and gang involvement.
U.S. Attorney Limtiaco commended the investigative efforts of the Guam Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agents and Task Force Officers.Patient Recruiter Pleads Guilty in Connection with <br /> $13 Million Health Care Fraud SchemeRead the Press Release
Pavel Zborovskiy, 57, of Brooklyn, N.Y., pleaded guilty today to conspiracy to pay and receive illegal health care kickbacks in connection with a $13 million health care fraud and money laundering scheme.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director in Charge George Venizelos of the FBI’s New York Field Office, and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG) made the announcement.
Zborovskiy pleaded guilty before U.S. District Judge Nina Gershon of the Eastern District of New York and is the sixth defendant to plead guilty in connection with the scheme. At sentencing on May 28, 2014, Zborovskiy faces a maximum penalty of five years in prison and a fine of more than $2.5 million.
According to court documents, from 2010 to 2012, Zborovskiy, working through an ambulette company, recruited patients to attend a Brooklyn clinic called Cropsey Medical Care PLLC. An ambulette is a vehicle that is licensed by New York State’s Medicaid program to transport beneficiaries to and from medical facilities when such transportation is medically necessary. Zborovskiy’s ambulette company transported the patients he had recruited to and from Cropsey Medical, and billed Medicaid for such transportation. Once Zborovskiy’s beneficiaries were transported to Cropsey Medical, Zborovskiy and others paid such beneficiaries cash kickbacks to induce them to continue to attend the clinic and to receive medically unnecessary physical therapy, diagnostic testing and other services. Such purported medical services were then billed by Cropsey Medical to Medicare and Medicaid.
According to court documents, from approximately November 2009 to October 2012, Cropsey Medical submitted more than $13 million in claims to Medicare and Medicaid, seeking reimbursement for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.
The case was investigated by the FBI and HHS-OIG and brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and U.S. Attorney’s Office for the Eastern District of New York. The case is being prosecuted by Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Shannon Jones of the Eastern District of New York.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .Former Corrections Officer Sentenced for His Role in <br /> Providing Armed Security for Drug TransactionsRead the Press Release
A former Puerto Rico Department of Corrections officer was sentenced today to serve 811 months in prison for his role in providing armed security for three drug transactions.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Rosa E. Rodriguez-Velez of the District of Puerto Rico, and Special Agent in Charge Carlos Cases of the FBI’s San Juan Field Office made the announcement.
Bernis Gonzalez Miranda, 27, was sentenced by U.S. District Judge Juan Perez Gimenez of the District of Puerto Rico. He was charged in a superseding indictment unsealed on Oct. 28, 2010, along with 89 law enforcement officers in Puerto Rico and 44 other individuals, as part of the FBI undercover operation known as Guard Shack.
In April 2012, a federal jury in San Juan found Gonzalez Miranda guilty of three counts of conspiracy to possess with intent to distribute more than five kilograms of cocaine, three counts of attempting to possess with the intent to distribute more than five kilograms of cocaine and three counts of possessing a firearm in furtherance of a drug transaction. According to the evidence presented in court, Gonzalez Miranda provided security for what he believed were illegal cocaine deals on June 15, July 2, and July 7, 2010. In fact, the purported drug transactions were part of an undercover FBI operation. On those days, the defendant’s actions included providing armed protection for the deals and escorting the buyer into and out of the transaction.
In return for the security he provided, Gonzalez Miranda received a cash payment of $2,000 for each transaction, and at sentencing he was ordered to forfeit the $6,000 he received.
The case was investigated by the FBI. The case was prosecuted by Trial Attorneys Kevin Driscoll and Monique Abrishami of the Criminal Division’s Public Integrity Section. The U.S. Attorney’s Office for the District of Puerto Rico also participated in the investigation and prosecution of this case.Cyber Criminal Pleads Guilty to Developing and Distributing Notorious Spyeye MalwareRead the Press Release
Aleksandr Andreevich Panin, a Russian national also known as “Gribodemon” and “Harderman,” has pleaded guilty to conspiracy to commit wire and bank fraud for his role as the primary developer and distributor of the malicious software known as “SpyEye,” which, according to industry estimates, has infected over 1.4 million computers in the United States and abroad.
Acting Assistant Attorney General Mythili Raman of the Department of Justice’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia and Acting Special Agent in Charge Ricky Maxwell of the FBI’s Atlanta Field Office made the announcement.
“Given the recent revelations of massive thefts of financial information from large retail stores across the country, Americans do not need to be reminded how devastating it is when cyber criminals surreptitiously install malicious codes on computer networks and then siphon away private information from unsuspecting consumers,” said Acting Assistant Attorney General Raman. “Today, thanks to the tireless work of prosecutors and law enforcement agents, Aleksandr Panin has admitted to his orchestration of this criminal scheme to use ‘SpyEye’ to invade the privacy of Americans by infecting their computers through a dangerous botnet. As this prosecution shows, cyber criminals – even when they sit on the other side of the world and attempt to hide behind online aliases – are never outside the reach of U.S. law enforcement.”
“As several recent and widely reported data breaches have shown, cyber-attacks pose a critical threat to our nation’s economic security,” said U.S. Attorney Yates. “Today’s plea is a great leap forward in our campaign against those attacks. Panin was the architect of a pernicious malware known as ‘SpyEye’ that infected computers worldwide. He commercialized the wholesale theft of financial and personal information. And now he is being held to account for his actions. Cyber criminals be forewarned: you cannot hide in the shadows of the Internet. We will find you and bring you to justice.”
“This investigation highlights the importance of the FBI’s focus on the top echelon of cyber criminals,” said Acting FBI SAC Maxwell. “The apprehension of Mr. Panin means that one of the world’s top developers of malicious software is no longer in a position to create computer programs that can victimize people around the world. Botnets such as SpyEye represent one of the most dangerous types of malicious software on the Internet today, which can steal people’s identities and money from their bank accounts without their knowledge. The FBI will continue working with partners domestically and internationally to combat cyber-crime.”
According to the charges and other information presented in court, SpyEye is a sophisticated malicious computer code that is designed to automate the theft of confidential personal and financial information, such as online banking credentials, credit card information, usernames, passwords, PINs, and other personally identifying information. The SpyEye virus facilitates this theft of information by secretly infecting victims’ computers, enabling cyber criminals to remotely control the infected computers through command and control (C2) servers. Once a computer is infected and under their control, cyber criminals can remotely access the infected computers, without authorization, and steal victims’ personal and financial information through a variety of techniques, including “web injects,” “keystroke loggers,” and “credit card grabbers.” The victims’ stolen personal and financial data is then surreptitiously transmitted to the C2 servers, where it is used to steal money from the victims’ financial accounts.
Panin was the primary developer and distributor of the SpyEye virus. Operating from Russia from 2009 to 2011, Panin conspired with others, including codefendant Hamza Bendelladj, an Algerian national also known as “Bx1,” to develop, market and sell various versions of the SpyEye virus and component parts on the Internet. Panin allowed cyber criminals to customize their purchases to include tailor-made methods of obtaining victims’ personal and financial information, as well as marketed versions that specifically targeted designated financial institutions. Panin advertised the SpyEye virus on online, invitation-only criminal forums. He sold versions of the SpyEye virus for prices ranging from $1,000 to $8,500. Panin is believed to have sold the SpyEye virus to at least 150 “clients,” who, in turn, used them to set up their own C2 servers. One of Panin’s clients, “Soldier,” is reported to have made more than $3.2 million in a six-month period using the SpyEye virus.
According to industry estimates, the SpyEye virus has infected more than 1.4 million computers in the United States and abroad, and it was the preeminent malware toolkit used from approximately 2009 to 2011. Based on information received from the financial services industry, over 10,000 bank accounts have been compromised by SpyEye infections since 2013 alone. Some cyber criminals continue to use SpyEye today, although its effectiveness has been limited since software makers have added SpyEye to malicious software removal programs.
In February 2011, pursuant to a federal search warrant, the FBI searched and seized a SpyEye C2 server allegedly operated by Bendelladj in the Northern District of Georgia. That C2 server controlled over 200 computers infected with the SpyEye virus and contained information from numerous financial institutions.
In June and July 2011, FBI covert sources communicated directly with Panin, who was using his online nicknames “Gribodemon” and “Harderman,” about the SpyEye virus. FBI sources then purchased a version of SpyEye from Panin that contained features designed to steal confidential financial information, initiate fraudulent online banking transactions, install keystroke loggers, and initiate distributed denial of service (DDoS) attacks from computers infected with the malware.
On Dec. 20, 2011, a Northern District of Georgia grand jury returned a 23-count indictment against Panin, who had yet to be fully identified, and Bendelladj. The indictment charged one count of conspiracy to commit wire and bank fraud, 10 counts of wire fraud, one count of conspiracy to commit computer fraud, and 11 counts of computer fraud. A superseding indictment was subsequently returned identifying Panin by his true name.
Bendelladj was apprehended at Suvarnabhumi Airport in Bangkok, Thailand, on Jan. 5, 2013 and was extradited from Thailand to the United States on May 2, 2013. His charges are currently pending in the Northern District of Georgia.
Panin was arrested by U.S. authorities on July 1, 2013, when he flew through Hartsfield-Jackson Atlanta International Airport.
The investigation also has led to the arrest of four of Panin’s SpyEye clients and associates in the United Kingdom and Bulgaria.
On Jan. 28, 2014, Panin pleaded guilty to conspiring to commit wire and bank fraud. Sentencing for Panin is scheduled for April 29, 2014, before United States District Judge Amy Totenberg of the Northern District of Georgia.
The case is being investigated by the FBI. Assistant United States Attorney Scott Ferber of the Northern District of Georgia, Trial Attorney Ethan Arenson of the Criminal Division’s Computer Crime and Intellectual Property Section and Senior Litigation Counsel Carol Sipperly of the Criminal Division’s Fraud Section are prosecuting the case. Former Assistant United States Attorney Nicholas Oldham also participated in the prosecution while with the Criminal Division.
Valuable assistance was provided by the Criminal Division’s Office of International Affairs and the following international law enforcement agencies: The United Kingdom’s National Crime Agency, the Royal Thai Police-Immigration Bureau, the National Police of the Netherlands - National High Tech Crime Unit (NHTCU), Dominican Republic’s Departamento Nacional de Investigaciones (DNI), the Cybercrime Department at the State Agency for National Security-Bulgaria and the Australian Federal Police (AFP).
Valuable assistance also was provided by the following private sector partners: Trend Micro’s Forward-looking Threat Research (FTR) Team, Microsoft’s Digital Crimes Unit, Mandiant, Dell SecureWorks, Trusteer and the Norwegian Security Research Team known as “Underworld.no”.Attorney General Holder Appoints Eight New U.S. Attorneys to Advisory CommitteeRead the Press Release
Attorney General Eric Holder today announced the appointment of the following eight U.S. Attorneys to serve two-year terms on the Attorney General’s Advisory Committee (AGAC): A ndré Birotte Jr., Central District of California; Thomas E. Delahanty II, District of Maine; Zachary T. Fardon, Northern District of Illinois; Wifredo A. Ferrer, Southern District of Florida; Kerry B. Harvey, Eastern District of Kentucky; Zane D. Memeger, Eastern District of Pennsylvania; Tim Q. Purdon, District of North Dakota; and Sarah R. Saldaña, Northern District of Texas.
“In the face of daunting staff and resource constraints, our U.S. Attorneys’ Offices are performing tremendous work in their districts across the country, standing on the front lines of federal law enforcement efforts,” said Attorney General Holder. “Each of the U.S. Attorneys who serves on the Attorney General’s Advisory Committee plays an indispensable role in guiding the Justice Department’s work as we confront a range of challenging issues and opportunities. I welcome the eight new members of the AGAC I’ve chosen to appoint today, and look forward to working closely with them to take fresh, and smart, approaches to fighting crime and achieving justice across the nation.”
The Attorney General also thanked the following U.S. Attorneys who have completed their two-year terms and are rotating off the committee: Laura E. Duffy, Southern District of California; Timothy J. Heaphy, Western District of Virginia; Brendan V. Johnson, District of South Dakota; Pamela C. Marsh, Northern District of Florida; Carmen M. Ortiz, District of Massachusetts; Robert L. Pitman, Western District of Texas; James Santelle, Eastern District of Wisconsin; Carter M. Stewart, Southern District of Ohio.
Chaired by U.S Attorney for the Eastern District of New York Loretta E. Lynch, the AGAC represents the voice of the U.S. Attorneys and provides advice and counsel to the Attorney General on policy, management and operational issues impacting the Offices of the U.S. Attorneys.
A brief bio on each new appointee is below:
A ndré Birotte Jr. was presidentially appointed and sworn in as the U.S. Attorney for the Central District of California on March 4, 2010. He previously served as the Inspector General for the Los Angeles Police Commission from 2003 to 2010 and as an Assistant Inspector General from 2001 to 2003. From 1995 to 1999, Birotte served as an Assistant United States Attorney for the Central District of California. He started his legal career as a Deputy Public Defender in the Los Angeles County Public Defender’s Office from 1991 to 1995. Birotte serves as Co-Chair of the AGAC’s Terrorism/National Security Subcommittee, and as a member of the Border and Immigration Law Enforcement Subcommittee, Civil Rights Subcommittee, Cyber/Intellectual Property Subcommittee, Violent and Organized Crime Subcommittee and White Collar/Fraud Subcommittee.
Thomas E. Delahanty II was presidentially appointed and sworn in as the U.S. Attorney for the District of Maine on July 1, 2010. Prior to his appointment, he served as a Justice for the Maine Superior Court for more than 26 years, and as Chief Justice from 1990 until 1995. From 1981 until 1983, he was a partner in the firm Delahanty & Longley. He previously served as the U.S. Attorney for the District of Maine from 1980 to 1981. Prior to this, Delahanty served as a District Attorney for Prosecutorial District 3 for Androscoggin, Franklin and Oxford Counties (1975 to 1980); as a County Attorney and Assistant County Attorney with the Androscoggin County Attorney’s Office (1971 to 1975); and as an associate at Marshall, Raymond & Beliveau (1970 to 1974). Delahanty serves as Chair of the AGAC’s Controlled Substances and Asset Forfeiture Working Group, as a member of the AGAC’s Medical Marijuana Working Group and the AGAC’s Border and Immigration Law Enforcement Subcommittee, and as a participant in the department’s Arab American and Muslim Outreach Program.
Zachary T. Fardon was presidentially appointed and sworn in as the U.S. Attorney for the Northern District of Illinois on Oct. 23, 2013. Prior to his appointment, Fardon was a partner at the law firm of Latham & Watkins where he served as the Chair of the Litigation Department in their Chicago office. Previously, Fardon served as the First Assistant United States Attorney in the Middle District of Tennessee from 2003 to 2006 and as an Assistant United States Attorney in the Northern District of Illinois from 1997 to 2003. He began his legal career working as an Assistant Public Defender in the Nashville Metropolitan Public Defender’s Office from 1996 to 1997 and as an associate at the law firm of King & Spalding from 1992 to 1996.
Wifredo A. Ferrer was presidentially appointed and sworn in as the U.S. Attorney for the Southern District of Florida on May 4, 2010. Ferrer previously served as an Assistant County Attorney and as Chief of the Federal Litigation Section in the Miami-Dade County’s Attorney’s Office from 2006 to 2010. From 2000 until 2006, he was an Assistant United States Attorney in the United States Attorney’s Office in the Southern District of Florida. While at the U.S. Attorney's Office, he served in the Public Integrity and National Security Section, the Economic Crimes Section, the Major Crimes Section, and the Appellate Division of the Office. Prior to that, he had been Counsel and Deputy Chief of Staff to the United States Attorney General from 1995 to 2000. From 1994 to 1995, Ferrer was a White House Fellow and Special Assistant to the United States Secretary of Housing and Urban Development. From 1991 to 1994, he had been a Litigation Associate with Steel Hector & Davis in Miami, Florida. From 1990 until 1991, Ferrer was a law clerk to then- District (now 11th Circuit) Judge Stanley Marcus. Ferrer serves as Vice Chair of the AGAC’s Controlled Substances and Asset Forfeiture Working Group.
Kerry B. Harvey was presidentially appointed and sworn in as the U.S. Attorney for the Eastern District of Kentucky on May 14, 2010. Harvey previously served as the General Counsel and Acting Inspector General of the Kentucky Cabinet for Health and Family Services from 2008 to 2010. He was a partner at Owen, Harvey, and Carter from 1991 to 2008; at Prince, Harvey, Brien & Carter from 1986 to 1991; and at Prince & Harvey from 1984 to 1986. Mr. Harvey worked as the Marshall County, Kentucky, Attorney from 1986 to 1994. He began his legal career as an associate at Brown, Todd & Heyburn from 1982 to 1984. Harvey serves as a member of the AGAC’s Health Care Fraud Working Group.
Zane David Memeger was presidentially appointed and sworn in as the U.S. Attorney for the Eastern District of Pennsylvania on May 10, 2010. Prior to his appointment, Memeger was a Partner at Morgan, Lewis & Bockius, LLP from 2006 to 2010. Previously, Memeger had served as an Assistant United States Attorney in the United States Attorney’s Office for the Eastern District of Pennsylvania from 1995 until 2006. From 1991 until 1995, Memeger was an Associate at Morgan, Lewis & Bockius, LLP. Memeger serves as a member of the AGAC’s Cyber/Intellectual Property Subcommittee, LECC/Victim/Community Issues Subcommittee, Violent and Organized Crime Subcommittee, White Collar/Fraud Subcommittee and Health Care Fraud Working Group.
Timothy Q. Purdon was presidentially appointed and sworn in as the U.S. Attorney for the District of North Dakota on August 24, 2010. Prior to his appointment, Purdon was a partner at Vogel Law Firm from 2005 to 2010; prior to his promotion he also served as an associate at the firm. From 1996 until 2001, Purdon worked as an associate at Dickson & Purdon, and he became a partner in the firm in 2001. From 1995 through 1996, he was an associate at Olson & Cichy. Purdon has also served as a law clerk for the Honorable Bruce M. Van Sickle of the United States District Court for the District of North Dakota. Purdon serves as a member of the AGAC’s Border and Immigration Law Enforcement Subcommittee, Native American Issues Subcommittee, Environmental Issues Working Group, and Local Government Coordination Working Group.
Sarah R. Saldaña was presidentially appointed and sworn in as the U.S. Attorney for the Northern District of Texas on Sept. 29, 2011. She previously served as an Assistant United States Attorney for the Northern District of Texas since 2004, serving as Deputy Criminal Chief for Fraud and Public Corruption since 2009. Ms. Saldaña was an attorney for Baker Botts, L.L.P, from 1987 to 1998, and Haynes Boone from 1985 to 1987. Following law school, she served as a judicial clerk to the Honorable Barefoot Sanders, U.S. District Court Judge for the Northern District of Texas, from 1984 to 1985. Saldaña serves as a member of the AGAC’s Border and Immigration Law Enforcement Subcommittee, Cyber/Intellectual Property Subcommittee, LECC/Victim/Community Issues Subcommittee and White Collar/Fraud Subcommittee.
The full AGAC membership is listed below:
Loretta E. Lynch, United States Attorney, Eastern District of New York, ChairSally Quillian Yates, United States Attorney, Northern District of Georgia, Vice Chair
David Barlow, United States Attorney, District of Utah
Andre Birotte Jr. – Central District of California
Thomas E. Delahanty II – District of Maine
Zachary T. Fardon – Northern District of Illinois
Wifredo A. Ferrer – Southern District of Florida
Richard S. Hartunian, United States Attorney, Northern District of New York
Kerry B. Harvey – Eastern District of Kentucky
Barbara L. McQuade, United States Attorney, Eastern District of Michigan
Zane D. Memeger – Eastern District of Pennsylvania
Wendy J. Olson, United States Attorney, District of Idaho
Timothy Q. Purdon – District of North Dakota
Sarah R. Saldan͂a – Northern District of Texas
Ronald W. Sharpe, United States Attorney, District of the Virgin Islands
Anne Tompkins, United States Attorney, Western District of North Carolina
Ronald C. Machen, United States Attorney, District of Columbia, ex officio
Daniel Bella, Criminal Chief, Northern District of Indiana, ex officio
Suzanne Bauknight, Civil Chief, Eastern District of Tennessee, ex officio
Robert Zauzmer, Appellate Chief, Eastern District of Pennsylvania, ex officio
Trifon Pineda Sentenced in District CourtRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that Defendant Trifon Pineda, age 44, was sentenced on January 16, 2014, in the District Court of Guam by Chief Judge Frances Tydingco-Gatewood. Pineda was sentenced to 55 months imprisonment, five years supervised release, ordered to pay a $100 assessment fee, and subject being deported.
Defendant and his co-defendant, Les Vitug, were arrested on a complaint on March 20, 2011. On March 23, 2011 the grand jury indicted the defendants for conspiracy to distribute more than 50 grams of methamphetamine and attempted possession with intent to distribute methamphetamine. On March 6, 2011, postal inspectors seized a package addressed from Les Vitug in California to Joan Vitug in Guam. Agents searched the package pursuant to a federal search warrant and recovered 27 grams of ice that was 99% pure. Les Vitug (sentenced on March 27, 2012 to 48 months) claimed the package and was detained by law enforcement agents. Vitug told agents he was picking up the package for his pare’ Pineda. Vitug called Pineda (with agents listening) to tell him the package was in. Pineda went to Vitug’s house where he was arrested. Pineda admitted that the package was his and it was sent to him by his brother Pablito Pineda who has also been indicted and has pled guilty. Pablito Pineda is awaiting sentencing.
Credit for the investigation is given to the Drug Enforcement Administration (DEA), U.S. Postal Service Inspectors, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Task Force Agents from the Superior Court of Guam’s Probation Office assigned to the DEA, Guam Customs and Quarantine, and the Guam Police Department. The case was handled by Assistant U.S. Attorney Clyde Lemons.
Medicare Fraud Strike Force Set Record Numbers <br /> for Health Care Fraud ProsecutionsRead the Press Release
The Justice Department’s Medicare Fraud Strike Force has set record numbers for health care prosecutions in Fiscal Year 2013, demonstrating the targeted and coordinated approach remains strong as the strike force enters its eighth year of fighting fraud against the government’s health care programs.
“These record results underscore our determination to hold accountable those who take advantage of vulnerable populations, commit fraud on federal health care programs, and place the safety of others at risk for illicit financial gain,” said Attorney General Eric Holder. “By targeting our enforcement efforts to ‘hot spots’ in nine cities, the Medicare Fraud Strike Force is allowing us to fight back more effectively than ever before.”
“The Medicare Fraud Strike Force is one of this country’s most productive investments,” said Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division. “We are not only putting hundreds of criminals who steal from Medicare in prison, but also stopping their theft in its tracks, recovering millions of dollars for taxpayers, and deterring potential criminals who ultimately decide the crime isn’t worth it.”
“Those perpetrating Medicare fraud cheat both taxpayers and vulnerable patients, and our Strike Forces are successfully fighting back – holding criminals accountable and recovering stolen dollars,” said Inspector General Daniel R. Levinson of the U.S. Department of Health and Human Services. “Our joint commitment to bring the fight against fraud to criminal hotspots around the country is steadfast.”
Under the supervision of the Criminal Division and U.S. Attorney’s Offices, the Medicare Fraud Strike Force is formed by coordinated teams of investigators and prosecutors – including personnel from the Justice Department, the U.S. Department of Health and Human Services and the FBI – who analyze Medicare claims data to target specific geographic areas showing unusually high levels of Medicare billing.
By focusing on the worst offenders engaged in current fraud schemes in the highest intensity regions, the strike force seeks to deter fraud in the target community and prevent it from spreading to other areas. The strike force is currently operating in nine cities: Baton Rouge, La.; Brooklyn, N.Y.; Chicago; Dallas; Detroit; Houston; Los Angeles; Miami and Tampa, Fla. S ince its inception in March 2007, strike force prosecutors have charged more than 1,700 defendants who have collectively billed the Medicare program more than $5.5 billion.
In Fiscal Year 2013, the strike force set records in the number of cases filed (137), individuals charged (345), guilty pleas secured (234) and jury trial convictions (46). In addition, the defendants who were charged and sentenced are facing significant time in prison – an average of 52 months in prison for those sentenced in FY 2013, and an average of 47 months in prison for those sentenced since 2007.
According to a recent report by the Inspector General for the U.S. Department of Health and Human Services, for every dollar the Departments of Justice and Health and Human Services have spent fighting health care fraud, they have returned an average of nearly eight dollars to the U.S. Treasury, the Medicare Trust Fund and others.
The Medicare Fraud Strike Force is part of an unprecedented partnership between the Departments of Justice and Health and Human Services called HEAT (Health care Enforcement and Prevention Action Team). Formed in May 2009, this partnership brings together high-level leaders from both departments to share information, spot trends, coordinate strategy and strengthen our fraud prevention efforts.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .Joint Statement by Attorney General Eric Holder and Director of National Intelligence James Clapper on New Reporting Methods for National Security OrdersRead the Press Release
Attorney General Eric Holder and Director of National Intelligence James Clapper released the following joint statement Monday:
“As indicated in the Justice Department’s filing with the Foreign Intelligence Surveillance Court, the administration is acting to allow more detailed disclosures about the number of national security orders and requests issued to communications providers, and the number of customer accounts targeted under those orders and requests including the underlying legal authorities. Through these new reporting methods, communications providers will be permitted to disclose more information than ever before to their customers.
“This action was directed by the President earlier this month in his speech on intelligence reforms. While this aggregate data was properly classified until today, the office of the Director of National Intelligence, in consultation with other departments and agencies, has determined that the public interest in disclosing this information now outweighs the national security concerns that required its classification.
“Permitting disclosure of this aggregate data resolves an important area of concern to communications providers and the public. In the weeks ahead, additional steps must be taken in order to fully implement the reforms directed by the President.
“The declassification reflects the Executive Branch’s continuing commitment to making information about the Government’s intelligence activities publicly available where appropriate and is consistent with ensuring the protection of the national security of the United States.”Related Materials:
DAG Letter
Stipulation of Voluntary Dismissal
Notice of Declassification